The ESG Social Housing Working Group
THE SUSTAINABILITY REPORTING STANDARD FOR SOCIAL HOUSING
The final report of the ESG Social Housing Working Group
NOVEMBER 2020 NOVEMBER 2020
CONTENTS
Foreword 3 Executive Summary 4 Introduction 6 1. The Market Context 8 2. The Role of Private Capital in Social Housing 16 3. The Sustainability Reporting Standard for Social Housing 23 Annex 1: ESG Criteria 30 Annex 2: Bibliography 38 Early Adopters 41 Endorsers and Supporters 42 THE SUSTAINABILITY REPORTING STANDARD FOR SOCIAL HOUSING
FOREWORD
The idea behind creating an Environmental, Social and Governance (ESG) reporting standard for social housing was born when we attended a meeting with a large UK institutional investor in 2019. The conversation turned to the rapidly growing interest in ESG and the way in which ESG factors would likely form a more fundamental role in the credit process underpinning future investment decisions. Indeed, a major UK pension fund investor recently described to us how ESG considerations are becoming as central to their credit process as a company’s balance sheet or profit and loss profile.
Conversations like this, as well as the various ESG questionnaires for this project from across the social housing and financial being sent to housing associations from investors convinced us sectors. Nearly 400 individuals participated in the consultation that momentum was gathering. This demanded a more proactive process launched in April 2020, providing invaluable feedback response from the social housing sector, which previously had which was used in shaping the final Standard presented in this relied on a presumption that it ticked ESG boxes but with little report. Furthermore, 39 housing associations and 31 lenders structure or consistent reporting to substantiate this. and investors have signed up as early adopters of the new Sustainability Reporting Standard for Social Housing with an Debt investment in the sector stands at almost £80bn and additional 16 organisations committed to endorsing it. growing. We are at the early stages of what may be a wave of equity investment in affordable housing, which along with public Now it is time for the working group to hand the project over sector funding will play a vital role in developing much needed to an industry representative governing body. The Social and new housing, as well as the investment required to improve Affordable Housing: Sustainability Reporting Standards Board building safety and deliver the decarbonisation agenda. The will develop and promote sustainability reporting standards UK social housing sector has a strong story to tell in relation to for the sector, investor community and wider stakeholders, as both ESG and impact performance. The sector also has a history well as provide guidance to support implementation. Plans are of collaboration and co-creating standards and metrics which well advanced for establishing this body along with supporting set a good precedent for this initiative. In summer 2019, we technical working groups to ensure the project’s positive launched a collaborative project to establish a consistent and momentum is sustained. broadly accepted sector-wide approach for ESG reporting, which would support and increase private sector investment in this We would like to thank all of the organisations and individuals vitally important sector for UK society and the economy. who have committed the time and financial support to bring this project to fruition. Our thanks also to The Good Economy team During the course of this project, the COVID-19 emergency has for its excellent leadership role in facilitating and managing the come to dominate all aspects of business, political, personal project. We also thank Ritterwald for sharing the environmental and family life. The UK social housing sector has moved and social criteria it developed for affordable housing providers, quickly and efficiently to keep delivering in challenging times, which formed a starting point for this approach. We hope that mobilising to support thousands of vulnerable people when it the publication of this voluntary reporting standard will become was most needed. Lockdown has reinforced how important it is widely adopted and provide a major step forward towards for people to have a good, safe home at a price they can afford. transparent, consistent and comparable ESG reporting in UK The sector is well placed to both help the country recover from social housing. the impact of the pandemic and also to play a leading role in promoting sustainable business practices. Susan Hickey Phil Jenkins Fast forward more than 12 months and we have been delighted with the enthusiastic support and endorsement received
– 3 – NOVEMBER 2020
EXECUTIVE SUMMARY THE STANDARD CONTEXT Following widespread consultation and Housing associations’ social purpose and impact is significant. engagement from across the housing and The need to scale up the supply of new genuinely affordable homes is clear. Investor interest is strong and growing. However, financial sectors, this report presents there is an increasing need for the UK social housing sector to the Sustainability Reporting Standard for clearly highlight and report on its strong ESG performance. Social Housing. The Standard is a voluntary disclosure framework for housing providers By establishing a transparent, consistent, and comparable set of ESG criteria, the sector can deliver an approach to ESG to report on their Environmental, Social reporting which can be adopted by key stakeholders, including and Governance (ESG) performance in a lenders, investors, regulatory bodies and government. transparent, consistent and comparable way. ESG SOCIAL HOUSING WORKING GROUP The first version of this ESG reporting approach was developed The project was initiated by Peabody, one of the UK’s oldest and based on a review of existing ESG investor questionnaires; largest housing associations and Centrus, a corporate finance workshops with subject matter experts, from partner investors firm which specialises in essential service industries and has to housing associations; and wider consultation, including with a market leading presence in providing advice to and raising Ritterwald, a German consultancy that has developed a Certified capital for the social housing sector in the UK and Ireland. Sustainable Housing Label. Peabody and Centrus brought together a working group to help lead the development of the proposed approach. This initial version was published in a White Paper in May 2020 and then opened to a public consultation and feedback process. This includes housing associations (Clarion, Optivo, Sovereign, More than 400 individuals participated in the consultation Guinness Partnership and Home Group); Investors (Insight M&G, process, with 53 organisations providing invaluable feedback L&G, NatWest, Pension Insurance Corporation and The Housing which was used in shaping the final reporting standard Finance Corporation); organisations concerned with growing presented in this report. the impact investment marketplace (Big Society Capital; Impact Investing Institute); and service providers active in the sector Furthermore, 39 housing associations and 31 lenders and (Savills and Trowers & Hamlins). investors have signed up as early adopters of the new Sustainability Reporting Standard for Social Housing, with an The Good Economy, a specialist impact advisory firm, led the additional 16 organisations related to the sector endorsing the process of researching and developing the ESG criteria using a Standard. Ultimately, the project aims to sustain and increase participatory, stakeholder-led process and produced this paper. capital flows into and across the UK social housing sector against a backdrop of significant changes in the policy and A Steering Group has now been set-up to establish a new investment environment. governance structure, the Social and Affordable Housing: Sustainability Reporting Standards Board, to oversee the implementation and adoption of the Standard. It will be up and running in early 2021.
The development of this voluntary reporting standard has been characterised by a positive market response and a high level of engagement from housing associations and investors – from traditional bank lenders to asset managers looking to participate in the UK social housing sector.
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REPORT SUMMARY Part three presents the ESG reporting approach. It proposes 12 themes and 48 criteria for ESG reporting by housing Following the introduction, the paper is divided into three parts: associations. These are qualitative and quantitative and are identified as core and enhanced requirements to demonstrate Part one describes the market context and social need for strong ESG performance. The criteria are also aligned to affordable housing. It examines the crisis in the supply of international frameworks and standards including the SDGs, genuinely affordable homes in the UK. Housing associations Global Reporting Initiative, SASB, ICMA and LMA Principles. have a critical role to play in meeting the need for new good quality, sustainable, affordable homes. The report examines the The 12 core themes are: role of housing associations in the context of the Sustainable Development Goals (SDGs). “Access to adequate, safe and Affordability and security affordable housing” is a core target for SDG 11 Sustainable Cities Building safety and quality and Communities. But housing is not just about “bricks and Resident voice mortar”. Having a decent, affordable home is an important Resident support determinant of people’s health and wellbeing (SDG 3), has a Placemaking positive knock-on effect on children’s education (SDG 4), can Climate change help people into decent work (SDG 8), can contribute to reducing Ecology inequalities (SDG 10) and can provide a route out of poverty Resource management (SDG 1). The social housing sector can also help reduce energy Structure and governance consumption and tackle climate change (SDG 7 and 13). The Board and trustees report also introduces the Impact Management Project’s Staff wellbeing approach to analysing impact that is increasingly being used by Supply chain management enterprises and investors. The final section of the report describes the planned creation Part two examines how private investment can complement of the Social and Affordable Housing: Sustainability Reporting public investment to address the UK’s affordable housing Standards Board which will lead the future development of the challenges. Private debt finance has played a longstanding standard and issue guidance with the input of working groups, and important role in the delivery of new social housing, with including early adopters of the standard. drawn debt levels currently standing at almost £80 billion. The UK social housing sector has become a firmly established asset The development of this voluntary reporting standard has class which is of increasing interest to a wide range of UK and been characterised by a positive market response and a high international institutional investors, including asset managers, level of engagement from housing associations and investors pension funds and insurance companies. The social housing – from traditional bank lenders to asset managers looking sector is also witnessing the entry of new equity funds bringing to participate in the UK social housing sector. All market new funding models to the sector. Affordable housing is well participants see the timeliness and usefulness of having a suited to pension fund and insurance company investment widely accepted sector-standard approach for all housing with its long-dated, index-linked returns, underpinned by associations to consider reporting on their ESG performance in government through the social security system and secured a transparent, consistent, and comparable manner. by property. Social and affordable housing is an investment opportunity that can deliver both stable financial returns and has strong ESG and impact credentials.
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INTRODUCTION BACKGROUND OBJECTIVES The social housing sector needs to sustain This paper presents the Sustainability Reporting Standard for and increase private capital flows to meet Social Housing as a voluntary reporting framework for housing providers to report on their ESG performance in a transparent, the urgent need for more high quality, consistent and comparable way. This will make it easier for affordable housing and improve the quality lenders and investors to assess the ESG performance of housing and environmental sustainability of existing providers, identify ESG risks and opportunities to create positive stock. However, for the social housing sector social and environmental outcomes. It also aims to lay the to deliver on its capacity to help solve the foundations for an approach to impact reporting for investors pursuing an impact investing strategy. The Good Economy and housing crisis, it is vital that this capital is Big Society Capital are leading a collaborative project to develop aligned to both the financing needs of the a sector-standard approach to impact reporting working with sector and the delivery of positive social and equity investors and housing providers. The results of this environmental outcomes. working group will be published separately later in 2020.
Today, most financial institutions are assessing the The objectives in developing this Standard were: Environmental, Social and Governance (ESG) performance of To sustain and increase capital flows into the UK social their investments in social and affordable housing. This is in part housing sector against a backdrop of significant changes in driven by the new UK Stewardship Code, launched in October the policy and investment environment. 2019, which requires all signatories, including asset owners and asset managers, to take ESG factors, including climate change, To develop sector approaches to measure, manage and into account across all asset classes when making investment report on ESG factors and impact performance. decisions. To create the basis for the development of ESG reporting standards and disclosure guidelines for the social housing More recently new real estate and specialist investors have sector that all market participants can use to account for entered the market, some of which are committed to ‘impact positive social and environmental outcomes. investing’ strategies, requiring them to demonstrate how their funds deliver both financial returns and net positive The UK social housing sector has strong social values and a environmental and social impact. tradition of building financially strong business models driven by a social purpose. With increasing mainstream investor Before this Standard, there was no consistent approach to interest in the ESG and impact investing opportunities in the assessing the ESG and impact performance of investments in social housing sector, the working group believe it is important social housing, which includes regulated social and Affordable that the integrity of the sector and its social purpose remains rent as well as Shared Ownership homes. The absence of any central. This is particularly important at a time when all market sector standard ESG reporting approach is problematic for the participants need to focus on tackling the affordability crisis following reasons: and respond to major issues such as building safety and de- carbonisation. It puts increased demands on housing associations to 1 complete ESG questionnaires, which often ask different We are pleased and encouraged by the positive market response questions. These are often drawn from broader corporate ESG and high level of engagement this initiative has received questionnaires – many of which are not relevant to housing both from housing associations and the investor market – associations and therefore create an information burden. from traditional bank lenders to asset managers looking to participate in this sector. All market participants see the It fuels a lack of clarity for housing association senior timeliness and usefulness of having a widely accepted sector- 2 management and boards, which are keen to act as good standard approach to ESG reporting. corporate citizens, but are unsure how best to navigate this area and provide lenders and investors with the information they need.
Failure to meet investor demands for ESG reporting 3 could mean the social housing sector will not be able to attract the capital flows it requires and investors will not be able to compare and allocate capital in a way which drives ESG standards up.
This project was launched in response to this market need.
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BENEFITS FROM THE STANDARD feedback and group consultation events. A total of 53 written contributions were received during the consultation period, Key expected benefits from having a Sustainability Reporting including 21 housing providers (including large and small Standard include: providers), 11 investors (including banks, equity providers and Build consensus on how to measure and report on ESG wholesalers) and eight sector specialists, as well as resident performance in the social housing sector focusing on groups, academics, charities and developers. questions which are relevant, meaningful and capable of being answered. As part of the group consultation events, four webinars were Reduce the ESG reporting information burden on housing hosted to both educate and encourage feedback from the wider associations. housing sector on the ESG approach and criteria. 391 people attended at least one of the four webinars, with an average Attract increased capital flows to social housing which are of 160 people per webinar. In order to involve a wide variety well-aligned to the sector’s needs in terms of its financial of stakeholders, an additional webinar was hosted with the objectives as well as its social and environmental objectives. tenant engagement experts TPAS to engage residents, as well as a webinar with The Housing Finance Corporation (THFC) for REPORT OUTLINE smaller housing providers.
The paper is structured into three parts: Overall, the feedback received was overwhelmingly positive. Part one provides an overview of the current housing crisis There was a high level of engagement from a range of and important role of housing associations in meeting the organisations with widespread support for a large proportion of social need for affordable, quality housing. the criteria within the framework. Part two examines how private investment can complement There was, however, feedback from some respondents that the public investment to address the UK’s affordable housing framework was not stretching or progressive enough and that challenges. thresholds were needed to provide an indication of what ‘good’ Part three presents the Sustainability Reporting Standard performance looks like. and the long-term governance arrangements. There were also requests for more clarity in relation to a number CONSULTATION AND ADOPTION of criteria in order to ensure consistent and comparable disclosures across different organisations. The ESG Social Housing White Paper was published in May 2020 with the first draft of a proposed set of themes and In response to the feedback, we have made several changes to reporting criteria. This opened wider market engagement and the criteria which are presented in Section 3 as the first version consultation on both the proposed reporting criteria and the of the “Sustainability Reporting Standard for Social Housing”. appropriate long-term governance arrangements for the further A separate public feedback statement is also available from development, provision and adoption of a sector-standard ESG esgsocialhousing.co.uk which documents the feedback reporting approach. received and our response.
The initial draft of the ESG performance criteria was developed The ESG Working Group has now set up a Steering Committee with input from subject matter experts from within the working to establish a Social and Affordable Housing: Sustainability group. Following on from this, there was a period of sector-wide Reporting Board which will lead the future development of the consultation, running from May to July 2020. Standard and issue guidance with the input of working groups, including early adopters of the Standard. Further details on the The consultation process involved engagement with over 400 set-up and objectives of this governance body are presented in organisations and individuals, through written feedback, oral the final section of the report.
For the social housing sector to deliver on its capacity to help solve the housing crisis, it is vital that this capital is aligned to both the financing needs of the sector and the delivery of positive social and environmental outcomes.
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1. THE MARKET CONTEXT THE UK IS IN THE MIDST OF A HOUSING CRISIS According to the National Housing Federation, The UK has also witnessed a sharp increase in homelessness and rough sleeping although efforts to house homeless people this is affecting nearly 8 million people, 1 in during the Covid pandemic show it is possible to end this crisis.5 1 every 7 people. At the same time we are building fewer homes than in many periods in the past. The effects of the housing crisis are well-documented. Millions of people are living in substandard or overcrowded conditions. Having a safe, decent, affordable home is a key determinant of Over one million people are stuck on local authority housing people’s health and wellbeing. The state of the housing market waiting lists, some for more than a decade.2 House prices and also has a socio-economic effect. Housing is a household’s rental costs have become unaffordable for many, such that single most important financial asset and often the largest home ownership rates have declined significantly – from 43% monthly expenditure item. Hence, the state of a housing for those age 27 in the 1970s to 25% for those born in the late market has a profound impact on the distribution of wealth in a 1980s. Many young people can’t afford to buy a home.3 The country. Homeowners may profit handsomely from house price median mortgage deposit has increased from around £13,000 rises, while those on low incomes remain locked out of home in 2007 to around £26,000 today.4 ownership or affording a decent home to live.
Chart 1: Breakdown of housing situation (2020)
OVERCROWDING 3.4m
UNABLE TO AFFORD RENT OR MORTGAGE 2.6m
HIDDEN HOUSEHOLDS 7.9m 2.7m TOTAL* UNSUITABLE HOUSING 1.4m
POOR QUALITY 1m
HOMELESS OR RISK OF HOMELESSNESS 0.4m
*People may experience more than one of these problems with their home, therefore the totals of each problem cannot be directly combined to create the overall total.
Source: National Housing Federation (NHF), https://www.housing.org.uk/resources/ people-in-housing-need/, People in Housing Need, September 2020.
1. National Housing Federation (NHF), People in Housing Need, September 2020. 2. MHCLG, Local authority housing statistics data returns for 2018 to 2019, England, 20 November 2019. 3. The decline of home ownership among young adults, The Institute for Fiscal Studies, 2018. 4. Affordable Housing Commission, Making Housing Affordable Again: Rebalancing the Nation’s Housing System, March 2020. 5. Currently, 140,000 families - including 200,000 children - live in temporary accommodation – or in hostels or B&Bs. An estimated 5,000-8,000 individuals sleep rough – figures which have risen substantially in the past decade. Sources: Crisis, Shelter and Office for National Statistics (ONS), Combined Homelessness and Information Network (CHAIN).
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MULTIPLE FACTORS HAVE CAUSED THE HOUSING CRISIS
There are multiple factors underlying the state of the wider housing stress (paying more than a third of net income on housing market. There is no simple, single housing market. housing costs) total 4.8 million households, representing one Instead there are multiple housing markets defined by location, in five of all households in England. The main effect of housing property type, tenure, and price. Equally, there is no single stress is worsening mental health, with nearly a quarter (23%) of explanation for the housing crisis. struggling renters saying their mental health had been affected.11
Research and evidence point to multiple factors, including:6 Lack of government investment – government commitment and funding both for building new social housing and for housing Population growth – rapid population growth and growth benefits has declined over the last decades. Government has in the number of households puts pressure on demand for focused more on low-cost home ownership and Affordable rent, housing, particularly in cities experiencing high rates of than investing in social rent housing for those most in need. urbanisation. People living longer also increases housing Over 3 million people currently receive housing benefit in the demand. UK.12 However, housing benefit has tended to cover a decreasing Financial markets – the financial sector has a role to play proportion of housing costs, such that even social rent homes in the state of the housing market. Bank lending policies and have become less affordable.13 mortgage rates play a role in price inflation and how easy it is for Land – the price of land as well as ownership and access to first time buyers to buy a home. The Buy-to-Let market has also land is also a key factor at the heart of the housing crisis. The increased competition for home ownership. cost of land, the value of which has increased fivefold since Low wage growth – UK average house prices have risen 1995, pushes up the cost of building new homes.14 Increasing much faster than wages, by over 260% in real terms since 1997 construction and labour costs also increase the cost of house compared to 68% for wages.7 On average, full-time workers building. paid nearly 8 times their annual salary to purchase a home in 2018 compared to 3.5 times in the early 1990s.8 Today, around 14 Given the housing crisis and its effects on people’s quality of million people in the UK live in poverty. The median household life, there has been renewed concern over the provision of disposable income is £29,400. Around 56% of people in poverty genuinely affordable housing to those in most social need. are in a working family, compared with 39% twenty years ago.9 There is also an increasing recognition of the importance of housing associations and local authorities in helping to solve Many people on low incomes are unable to afford a decent the housing crisis and meet the need for quality, affordable standard of living, including a decent home.10 Households in homes for everyone.
6. Understanding Local Housing Markets, Advice and Guidance for Local Authorities, A Report for the Local Government Association, Residential Analysts, June 2019; BBC Housing Review, March 2020. 7. https://www.ogilvyandsneyd.co.uk/the-astonishing-relationship-between-wages-and-property-prices/ 8. ONS, Housing affordability in England and Wales: 2019. 9. JRF Poverty Report, 2019. 10. Office of National Statistics, Annual Survey for Hours and Earnings (ASHE) 2019. 11. Affordable Housing Commission, Making Housing Affordable Again: Rebalancing the Nation’s Housing System, March 2020. 12. National Statistics, DWP benefits statistics, August 2020. 13. Resolution Foundation, Housing Policy: https://www.resolutionfoundation.org/major-programme/housing-outlook/ housing-policy/?section=Housing%20benefit%20coverage%20by%20tenure 14. NEF, Building the Social Homes We Need – Solving the Land And Capacity Challenges, November 2019.
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THE SOCIAL HOUSING SECTOR HAS A VITAL ROLE TO PLAY IN HELPING TO MEET HOUSING NEED Regulated housing providers play a critical As of November 2019, there were about 5 million homes in the social sector in the UK, of which 4.15 million homes were in role in meeting housing need, particularly England. Of the 5 million homes, about 2 million homes are let, for vulnerable people and those who cannot owned and managed by a local authority and 3 million are let, afford to rent or buy in the private market. owned or managed by PRPs.16
There are two types of regulated provider – local authorities and The social housing sector has witnessed enormous changes private registered providers (PRPs), which include not-for-profit in the last few decades. This includes the rise of housing housing associations, for-profit providers, housing cooperatives, associations as the largest providers of social housing, community land trusts and specialist charities. PRPs total more increasing consolidation among housing associations as well as than 1600 organisations, the majority of which are not-for-profit the more recent entry of for-profit providers. The housing sector housing associations. Most PRPs have fewer than 250 homes. has also witnessed the rise of private renting with the number However, there are 272 providers (also known as large PRPs) of households in the Private Rental Sector (PRS) increasing from which manage at least 1000 or more units of social housing 3.6 million in 2007 to 5.4 million in 2017, an increase of 52%.17 representing more than 96% of PRP stock.15 Local authorities are also re-entering the social housing market following the government scrapping of the borrowing cap in 2018 in a bid to boost council housebuilding.
Chart 2: The rental sector in Great Britain by tenure, 1980-2017
8
7
6
RENTED PRIVATELY 5 ALL RENTED SOCIAL HOUSING
4 Millions 3 RENTED FROM HOUSING ASSOCIATIONS RENTED FROM LOCAL 2 AUTHORITIES
1
0 1980 1985 1990 1995 2000 2005 2010 2015
Data for earlier years are less reliable and definitions may not be consistent throughout the series (change in methodology marked by grey vertical lines).
Source: Ministry of Housing, Communities & Local Government; Live tables on dwelling stock (including vacants); Table 102: by tenure, Great Britain (historical series)
15. Regulator of Social Housing, Private registered provider social housing stock in England – sector characteristics and stock movement, 2018-2019, October 2019. https://www.gov.uk/government/statistics/statistical-data-return-2018-to-2019 16. ONS, Comparing affordable housing in the UK: April 2008 to March 2018, November 2019; MHCLG, Local authority housing statistics data returns for 2018 to 2019, England, 20 November 2019. 17. ONS, UK private rented sector: 2018: https://www.ons.gov.uk/economy/inflationandpriceindices/articles/ukprivaterentedsector/2018
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Homes within the regulated social housing sector are provided As seen in the graph below, Affordable Housing (comprising at sub-market and discounted rates through a range of tenure Shared Ownership and Affordable rent) has increased in recent types:18 years with social rent decreasing. Public housing investment in England continues to increase but promoting the non- Social rented housing – usually rented at around 50% of local regulated affordable private market and home ownership are market rent, prioritised by need identified by local authorities. still the government’s main priorities. Analysis of affordability Affordable rent product – rents are typically set at 65-80% based on income distributions shows that a large number of of market rent and allocated by need. The Regulator for Social households cannot afford the private market on any reasonable Housing defines both social rent and Affordable rent setting norms. Many households require social rent housing which is in and places limits on annual rent increases. increasingly short supply. Shared Ownership – housing that residents can part buy and part rent as a means of providing a first step on the housing ladder.
Chart 3: Trends in the supply of affordable housing completions by tenure, England 1991-92 – 2018-19
80,000
ALL AFFORDABLE HOUSING 70,000
60,000
50,000 SOCIAL RENT 40,000
30,000 SHARED OWNERSHIP / AFFORDABLE HOME 20,000 OWNERSHIP
10,000 AFFORDABLE RENT
0 1991-92 1994-95 1997-98 2000-01 2003-04 2006-07 2009-10 2012-13 2015-16 2018-19
Note: All Affordable Housing also includes London Affordable rent, intermediate rent and unknown tenure.
Source: MHCLG, Affordable Housing Supply: April 2018 to March 2019 England, 20 November 2019
18. Shelter, What is ‘affordable housing’?, 10 August 2015 https://blog.shelter.org.uk/2015/08/what-is-affordable-housing/
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THERE IS AN URGENT NEED TO INCREASE MAJOR INVESTMENT IS NEEDED TO MEET THE SUPPLY OF QUALITY, AFFORDABLE SAFETY STANDARDS AND ZERO CARBON HOMES FOR THOSE ON LOW INCOMES TARGETS
There is an urgent need for more homes that provide people While the need for new homes is evident, the on low incomes with security, decent living conditions and current social housing stock is also in urgent affordability across all tenure types. In particular there is a need for more social rented homes. The large-scale cuts need of refurbishment to meet new fire safety to government support of social rent combined with the standards, align with regulatory standards and introduction of Affordable rent has inevitably impacted on the meet the Future Homes Standards, as well as supply of genuinely affordable new homes. improve the current stock in order to meet the government’s 2050 net-zero carbon target. Yet many housing associations have expanded and operated more commercially and developed cross-subsidy models to In February 2019 the UK Committee on Climate Change warned keep delivering social housing. Housing associations build that “UK homes are not fit for the future” and made a series of thousands of new homes every year. In England, in 2018/19, they recommendations including no new homes to be connected to built more than 45,000 homes, nearly a third of all new homes the gas grid from 2025. Retrofitting existing social housing and in England. This includes more than 5,000 homes for social rent, investing in new home construction with methods that could more than 19,000 homes for Affordable rent, and more than help meet these recommendations is a major challenge. 14,000 homes for Shared Ownership. Large-scale investment amounting to tens of billions of pounds A study by Crisis and the NHF estimates a need to build over is needed both to build new quality homes that are genuinely 380,000 affordable homes every year for the next fifteen years affordable and retrofit existing stock to meet net-zero carbon across Great Britain, of which 100,000 should be social rent.19 targets. Public investment is vital, but private investment also has a critical role to play. Chart 4: New housebuilding requirements in Great Britain based on need Hence, we welcome the growing interest of investors in the UK INTERMEDIATE social housing sector. Ensuring private sector finance meets SOCIAL SHARED TOTAL AFFORDABLE the needs of the social housing sector requires collaboration RENT OWNERSHIP RENT and alignment of financial, social and environmental objectives between local authorities, housing associations and private England 340,000 90,000 25,000 30,000 sector funders, as well as developers, underpinned by a supportive government housing policy and public investment strategy. Scotland 26,000 5,500 2,500 2,000
Wales 14,000 4,000 1,500 1,500
Great 380,000 100,000 29,000 33,500 Britain
Source: Professor Glen Bramley, Crisis & NHF Housing supply requirements across Great Britain, November 2018
The amount of capital needed to meet this housing need is estimated at over £10bn a year (NHF).
19. Crisis/NHF, Housing supply requirements across Great Britain: for low-income households and homeless people, Professor Glen Bramley, November 2018
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THE IMPACT OF HOUSING ASSOCIATIONS
Affordable housing has multiple positive social health and wellbeing (SDG 3), has a positive knock-on effect on and environmental impacts. The majority children’s education (SDG 4), can help people into decent work (SDG 8), can contribute to reducing inequalities (SDG 10) and can of investors are looking for investment provide a route out of poverty (SDG 1). Housing’s carbon footprint opportunities with strong ESG credentials. can also be reduced through the right energy efficiency and More and more investors, including large- construction measures (SDGs 7 and 13). scale asset owners such as pension funds are looking to optimise the social and As a result, there is a strong social and environmental impact case for investing in the UK social housing sector. Importantly, environmental impacts of their investments. housing associations have place-based impacts providing The Sustainable Development Goals (SDGs), adopted by all UN affordable housing in nearly every town and city in the UK. member states in 2015, have become a powerful rallying call They act as anchor organisations in many poor communities, and set of common global goals that demand investors – along contributing to community wealth building through with governments, business and civil society – to do more to employment, procurement, service provision and investments. end poverty, protect the planet and ensure that all people enjoy Housing associations employ almost 150,000 people in England, peace and prosperity.20 Achieving the SDGs will require trillions manage assets with a combined value of £155bn and run of pounds of additional investment each year in both developing resident and community support programmes worth £70m a and developed countries. year. As housing associations are embedded in the community and unlikely to leave that place, they can provide direct benefits to their residents and local areas for the long term.22 Investors are moving beyond ESG towards contributing to the SDGs. Housing associations also have an important role in place shaping – investing in housing and wider regeneration Affordable housing is recognised as a universal social good developments that aim to meet local needs and create great within the SDGs. “Access to adequate, safe and affordable places for people not just to live but to enjoy their lives. Hence, housing” is a core target for SDG 11 Sustainable Cities and housing associations can offer investors, such as local government Communities. But housing is not just about “bricks and mortar”. pension funds, the opportunity to invest in their local communities There is strong evidence, including in the UK, that good housing and respond to the growing demand of the UK public to see their contributes to other positive outcomes.21 Having a decent, pension investments have a positive impact.23 affordable home is an important determinant of people’s
Chart 5: How social housing contributes to the Sustainable Development Goals
Source: The Good Economy
20. UN, Transforming our world: the 2030 Agenda for Sustainable Development, September 2015. 21. UN, Transforming our world: the 2030 Agenda for Sustainable Development, September 2015. 22. CLES, Toolkit: Housing associations as anchor institutions, October 2020. 23. Investing in a Better World: Understanding the UK Public’s Demand for Opportunities to Invest in the Sustainable Development Goals, UKAID, PwC, The Good Economy 2019.
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POSITIVE IMPACT CREATION IS INTRINSIC TO HOUSING ASSOCIATIONS’ BUSINESS MODEL The UK social housing sector has strong The reinvestment of surpluses is a fundamental feature of social values and a tradition of building housing associations’ business model and one that is well- aligned to the delivery of social housing at scale. Increasing the financially strong business models driven scale of public and private investment into the social housing by a social purpose. sector is vital to housing associations being able to deliver on new affordable housing, including much needed social rent. Housing associations are non-profit organisations, often registered as charities, that fund their social housebuilding in a number of ways: Peabody By borrowing commercially from banks, private placements Housing associations are mostly non-profit organisations, and bond issues. originally formed by private individuals concerned about local housing provision, such as George Peabody, an Through rental income paid directly by their residents (who American financier who lived in London. He is widely pay below market rents), about 60% of whom rely or partially regarded as the father of modern philanthropy but could rely on housing benefit or universal credit. also be regarded as a founding father of social enterprise By building homes for private sector sale or rent and and impact investing. He founded what is now The Peabody re-investing the profits into social rented homes. Trust with an initial investment of £150,000 which grew to Directly from central government investment. £500,000 in total. The Trustees stipulated that this should generate a 3% return, with the profits being reinvested Any surpluses housing associations make are re-invested in into building more social housing in perpetuity. Today, housing including improving the quality of existing stock and Peabody owns and manages around 66,000 homes and building new, additional homes. This business model means its average rents are almost £500m a year lower than the wealth created through housing is retained in local areas or market. Surpluses are reinvested into maintaining existing used to cross-subsidise social and affordable housing between homes, building more homes and providing services. neighbouring areas, rather than returned to shareholders nationally and globally.
THE SOCIAL HOUSING SECTOR HAS A TRACK RECORD OF MEASURING ITS SOCIAL VALUE Measuring social value – or the non-financial impacts – of the A new approach to analysing impact has been developed by the social housing sector has gained increasing attention over Impact Management Project (IMP), a global forum for building the past five years. HACT, an industry-focused think/do tank consensus on how to measure, manage and report on established by the housing association sector, has played a impact.. The IMP has developed a useful way for organisations leading role in social value measurement in the sector. HACT’s to describe and assess their impact.24 The IMP describes impact Wellbeing Valuation Approach is one of the most widely used based on an analysis of five dimensions: who is being impacted, approaches. Another approach is Hyde’s Value of a Social in what way, by how much, the contribution of the organisation Tenancy methodology. to the change in outcomes and the risk of target outcomes not being met. Below we use the IMP approach to highlight some In January 2020, HACT established the UK Social Value in Housing examples of the positive social and environmental outcomes of Taskforce to take stock of where the sector is with regards to housing associations. social value measurement and how to further develop common approaches. This ESG reporting standard complements the detailed social valuation and impact assessment work being led by HACT and others. This culminated in the publication of the Social Value Roadmap, published in summer 2020.
24. See www.impactmanagementproject.com
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Chart 6: An example of applying the IMP to a housing association
SOCIAL OUTCOMES: RESIDENT ENVIRONMENTAL OUTCOMES: DIMENSION DEFINITION QUALITY OF LIFE ENERGY EFFICIENT HOMES
WHAT impact is The outcome experienced Change in physical, mental and Reduction in home the housing by the stakeholder when economic wellbeing energy consumption association having? engaging with the enterprise
People who are unemployed, on low- The type of stakeholder The planet (and current incomes or claiming benefits experiencing the outcome and future generations) WHO is experiencing e.g. disability benefit the impact? Initial disposable income Baseline level of outcome Baseline emissions data Baseline wellbeing
The number of homes The number of residents provided The scale of the outcome with improved energy housing by the housing association efficiency
The extent to which residents experience HOW MUCH impact The improvement in EPC The depth of the outcome a change in wellbeing following a move is the housing rating of the housing – i.e. the degree of change into a home association experienced by the associations’ portfolio The change in rental costs experienced creating? stakeholder versus the by residents, benchmarked against PRS leading to lower carbon baseline and Local Housing Allowance emissions
Duration – how long does Length of leases Length of leases the impact last for?
How much All improvements to CONTRIBUTION The additional outcomes The number of residents who move into energy efficiency that is the housing that will be experienced as homes from the social housing waiting are beyond the housing association making a result of the actions of the lists associations legal towards this housing association obligations impact?
Execution Risks: The housing association is unresponsive to resident requests and complaints The housing association is not well Execution Risks: What is the The indicators of risk that RISK governed and/or financially viable Plans to improve EPC rating of the impact not may undermine the delivery Poor quality and/or small homes are not implemented happening? of the outcome negatively effect resident wellbeing Rental rates are not genuinely affordable for low-income households in local market contexts
The UK social housing sector has strong social values and a tradition of building financially strong business models driven by a social purpose.
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2. THE ROLE OF PRIVATE CAPITAL IN SOCIAL AND AFFORDABLE HOUSING
PRIVATE FINANCE HAS LONG PLAYED A Housing associations borrow directly from banks, and issue bonds publicly and via private placements in the institutional ROLE IN THE UK SOCIAL HOUSING SECTOR debt capital markets to raise finance. Some medium and Private debt finance has played an important smaller sized housing associations use aggregators such as The role in the delivery of social housing for Housing Finance Corporation (THFC) to access the institutional market at cost effective rates. decades. It enables housing associations to use their no loss on default history, regulated Prior to 2008, housing association private finance was status, strong balance sheets and credit dominated by long term lending from UK banks and building ratings to raise a multiple of their reserves and societies. However, the global financial crisis saw banks grants for the management of existing stock reducing balance sheet exposures and capital models becoming punitive for the sort of long-term lending traditionally and delivery of more homes. provided to housing associations. From around 2010 onwards, Drawn debt levels currently stand at £79.4bn against property institutional investors were effectively asked to replace this assets of £164bn.25 Of total available debt facilities of £101.9bn long-term lending. the majority is bank debt (£60.7bn) with debt from the capital markets on the rise and currently totalling £39bn (see Chart Since then, social housing has become an established and 7). With the decline of government investment combined with widely recognised asset class which is of increasing interest the pressure to build more homes in recent years, housing to a wide range of UK and international institutional investors, associations have increased borrowing levels and equity including asset managers, pension funds and insurance investment is becoming more prevalent, albeit the scale of this companies. Social housing is well suited to pension fund and is still very small. insurance company investment with its long-dated returns, underpinned by government benefit payments and secured by Overall the estimated composition of funding into the social property. Social housing is also an investment opportunity that housing sector is approximately 33% government investment, has strong ESG and impact credentials. 40% bank debt, 26% capital markets debt and 1% equity.
Chart 7: Cumulative investment from the capital markets (2013-2019)
45
40
35
30
25 £bn 20
15
10
5
0 2013 2014 2015 2016 2017 2018 2019
Source: Regulator of Social Housing, Quarterly Surveys https://www.gov.uk/government/collections/quarterly-survey-of-private-registered-providers
25. Regulator of Social Housing, 2019 Global Accounts of private registered providers, December 2019. https://assets.publishing.service.gov.uk/ government/uploads/system/uploads/attachment_data/file/852013/2019_Global_accounts_of_private_registered_providers.pdf
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RAPIDLY INCREASING CAPITAL FLOWS TO Sustainability-Linked Loans GREEN, SOCIAL AND SUSTAINABLE BONDS Several banks are taking an increasingly proactive OFFERS AN OPPORTUNITY FOR HOUSING approach to ESG and in some cases providing incentives to improve environmental and social performance in the ASSOCIATIONS form of sustainability-linked loans (SLLs). SLLs are There has been a significant increase in the issuance of corporate purpose loans whose structure is designed to green, social and sustainable bonds globally in the last incentivise borrowers’ commitment to meeting key social- decade aligned to both the International Capital Market and environmental-based performance targets. Under the Association’s (ICMA) and the Loan Market Association (LMA) terms of such loans, a component of the interest rate is Green, Social and Sustainability Bond Principles. Total green dependent upon the borrower meeting specific sustainability bond issuance was valued at around $258 billion in 2019 and indicators that have been agreed with the lender. Social and Sustainability bonds reached a level of $65 billion with an increase in social bond issues linked to the Covid This innovative financing mechanism has become response. European and Asian institutions have been the increasingly popular in the UK social housing sector in largest issuers.26 recent years, with several housing associations taking such loans including Optivo, L&Q, Peabody and Clarion. There is a big opportunity for UK housing associations to list In Peabody’s case, the interest rate margin is linked to their bonds as Social and/or Sustainability bonds and access delivering an agreed number of accredited childcare a larger pool of investors, potentially with positive benefits on qualifications under its childcare training programme. pricing. Capital raised through bond issuance can be used to For Optivo, L&Q and Clarion, the terms of their respective finance the development of new homes and for retrofitting and deals are linked to supporting an agreed number of refurbishment to meet safety and environmental standards. residents into employment. Listing such bonds requires housing associations to measure As of November 2020, around £0.5 billion of SLL deals and report on their ESG credentials. Cross Keys Homes was have been completed within the UK social housing sector. the first housing association to issue a Green Bond in 2014. In These deals have come from several banks including BNP 2020, Clarion became the first housing association in the UK Paribas, who offered the sector’s first SLL in 2018, as well market to issue a Sustainability Bond (see box). MORhomes as NatWest, Sumitomo Mitsui Banking Corporation (SMBC) has further opened access to such finance for the UK social and First Abu Dhabi Bank. Lloyds have also revealed that housing sector. It is a wholesale lender that issues bonds they intend to deliver SLLs within the UK housing sector and represents over 60 housing associations who are its and we expect more lending institutions to develop such shareholders and borrowers. MORhomes has developed a products. Social Bond Framework, accredited by Sustainalytics, under which it issues social bonds to raise financing for its Peabody’s CFO at the time, Susan Hickey, discussing shareholder housing associations. It is currently developing their SLL, stated: “This loan facility will contribute to our a Sustainability Bond Framework using the same approach wide-ranging activities including delivering the low-cost MORhomes is an early adopter and the Sustainability Bond homes that are desperately needed”. Furthermore, she framework includes a pre-borrowing questionnaire which will mentioned “the savings we’ll make on interest payments use the core criteria from the Sustainability Reporting Standard. by facilitating affordable childcare will be directly invested into the Peabody Community Foundation.” The ESG reporting approach presented in this report has been designed to align with both the ICMA and LMA Social and Sustainability Bond Principles and can help housing associations meet the reporting standards required by the ICMA and LMA (see box on page 24).
26. Climate Bonds Initiative, Green Bond Highlights 2019, February 2020.
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THE SECTOR IS WITNESSING THE ENTRY Clarion and ESG – the journey so far OF MAINLY EQUITY FUNDED FOR-PROFIT When developing its sustainability strategy, Clarion HOUSING PROVIDERS recognised that it could further improve its impact on lives, communities and the economy in which it In recent years, the social housing sector has also seen the operates. It saw a clear alignment to the UN Sustainable entrance and rise of for-profit registered providers (FPRPs) Development Goals which helped structure its approach. such as Sage (90 % owned by Blackstone, the world’s largest It also saw that it needed to better articulate its efforts to private equity investor), L&G, Grainger and British Land, as stakeholders, not least the funding community. This led well as specialist housing funds, such as Funding Affordable to the establishment of a Sustainable Housing Finance Homes (FAH), now part of Cordings Real Estate Group, and ReSI, Framework from which it would look to raise funding for now managed by Gresham House. This has also been linked specific projects of a sustainable nature. to the recent inflow of private capital into the market with private equity investors setting up FPRPs in order to access The Group also wanted to benchmark its activities against the regulated social and affordable housing sector. Social others in and outside the housing sector, and so decided housing strategies are also being developed by large real estate to undergo an external assessment of not only its Social investment firms, such as CBRE Global Investors, LendLease Housing Finance Framework but its entire approach to and M&G, which raise and manage investment from institutional sustainability. This led to the Group’s accreditation in investors, including European pension funds and insurance November 2019 with Ritterwald’s pan-European Certified companies. However, the number of homes owned by for-profit Sustainable Housing Label, which considers green and social providers is still a very small fraction of the not-for profit sector indicators and is aligned to ICMA Green and Social Bond (less than 6,000 homes in 2019 compared to 3 million). principles. To give further assurance to institutional investors Equity funding models have different investment strategies, it then sourced an expert opinion from a sustainability business models and return expectations. These range from rating agency. those aiming to acquire and own housing assets over a 20-40 year period and provide liability matching for long-term pension Sustainability credentials were used in the marketing of investors seeking returns of circa 5-7% Internal Rate of Return a 15-year 1.875% bond which Clarion issued in January and those willing to take on development risk and finance new 2020. The bond proceeds will be used for the development build housing seeking returns of circa 10-12%. of new build energy efficient affordable homes. It was the first Sustainability Bond from the sector and To date, the UK social housing market has seen low levels of generated significant investor interest, including overseas UK institutional investment compared to Europe.27 However, as accounts who had not previously invested in UK housing these new funds develop a track record and demonstrate their associations, many of whom were looking to invest risk, return and impact credentials, institutional investment, exclusively in sustainability funds. including from UK pension funds, is expected to increase.
27. See Ritterwald’s paper on “Institutional investments in social and affordable housing in Europe”, May 2020 https://www.ritterwald.de/publications/institutional-investments-in-social-and-affordable-housing-in-europe
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EQUITY-FUNDING MODELS BRING OPPORTUNITIES, BUT RISKS NEED TO BE MITIGATED Equity-funding models bring opportunities, However, the entry of for-profit providers and equity funders but risks need to be mitigated. Equity models, also brings risks. The Regulator for Social Housing has warned that profit-motivated investors may bring in funding models backed by institutional investors, bring new that create systemic risks to the social housing sector. Lease- large-scale sources of capital to the social based funding models have raised particular concerns including housing sector, and have a role to play in the fact that index-linked payments by housing associations helping to tackle the housing crisis. There may become less affordable over time; that lease structures are opportunities for mutually beneficial can leave housing associations bearing most of the financial risk such as voids and repairs; and that for-profit providers partnerships between private investors, local may unscrupulously take advantage of more generous local authorities, and housing associations. authority rent regimes designed to help house those with additional needs. These are critical risks that must be avoided. Private investors are becoming increasingly prominent as All investors in social housing should be expected to adhere to developers and owners of social homes and partnering with high standards of social responsibility and ensure their funding housing associations to provide housing management services models do not place partner housing associations or the wider through long-term leasing arrangements. Such arrangements sector at risk. can effectively enable housing associations to provide more homes without further borrowing. Such funding arrangements Ultimately, the motivations underpinning investment into can be particularly useful for small and medium-sized housing the social and affordable housing sector is critical. It is of organisations which have reached the limits of their borrowing fundamental importance that equity funding is aligned with and capacity. supportive of creating social value, not just financial value, and that financial returns are fair and do not extract excessive profit The entry of institutional investment also has the potential to from the sector. drive up quality and management standards particularly in the private rented sector, which is dominated by large numbers We see the approach to ESG measurement and reporting of small, unregulated landlords as well as within segments of proposed in this report as the first step in creating a sector- the social housing sector e.g. specialist supported housing. standard approach which will help hold all investors and Institutional investors, such as CBRE Global Investors, L&G and housing providers to account for delivering social and M&G, have long track records in real estate development and environmental benefits underpinned by good governance. bring these skills into the social housing sector. Some private investors have a strong focus on sustainability standards and bring a focus on sustainable design and construction methods and how to maximise energy efficiency and minimise carbon emissions.
We see the approach to ESG measurement and reporting proposed in this report as the first step in creating a sector- standard approach which will help hold all investors and housing providers to account for delivering social and environmental benefits underpinned by good governance.
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ESG INTEGRATION AND IMPACT INVESTING ARE ON THE RISE The world’s sustainable investment market is Alongside this focus on ESG is the rise of impact investing across the financial markets. Emerging in 2008 in a publication now valued at £22.8 trillion, a 34% increase in from the Rockefeller Foundation, the term ‘impact investing’ 28 two years. ESG integration into investment began primarily as a conversation on how to use capital strategies has grown globally by 69%, between differently. As with ESG, it is a component of a broader shift 2016 and 2018. The Investment Association towards a more responsible, sustainable and inclusive form of estimate the size of the UK sustainable capitalism, sometimes called stakeholder capitalism.
investment market to be £2 trillion. At least While impact investing started as an investment approach 22% of the total UK asset management developed by specialist impact investors focused on delivering industry is now sustainably invested. financial returns alongside positive social and/or environmental impact, it is rapidly entering the mainstream. It is seen as What is distinctive about the rise of ESG compared to previous part of a larger movement to shift the cultural mindset of iterations of responsible investment is that ESG is largely the mainstream financial sector to look beyond profits and applied through the lens of financial materiality. That is, prosperity to creating benefits for people and planet. The embedding ESG factors into capital markets is widely regarded increasing public recognition of the climate emergency has to not only contribute to more sustainable markets and better helped drive this mainstream interest. Impact investments can societal and environmental outcomes, but to make financial be made across all asset classes, including corporate debt, 29 sense. This idea was put forward, with the term ESG first private equity and real estate. coined, in a 2005 report entitled ‘Who Cares Wins’.30 The report was the result of a joint initiative convened by the UN Global Based on the Global Impact Investing Network’s (GIIN) Annual Compact, the International Finance Corporation (IFC) and Investor Survey, the impact investing market is estimated to the Swiss Government involving institutional investors, asset have grown from roughly $25 billion in 2013 to $715 billion managers, analysts, government bodies and regulators. at the end of 2019, up from $502 billion at the end of 2018.32 This substantial growth in the scale of the market has been Following the publication of this landmark report, the Principles galvanised by increasing discussions around how best to for Responsible Investment (PRI) was launched the following harness the potential of the capital markets to address global year at the New York Stock Exchange, with the principles challenges. providing a global framework for investors to consider ESG issues. Since its inception 14 years ago, the PRI has grown to The launching of the Sustainable Development Goals (SDGs 31 contain more than 2,500 signatories from over 60 countries. or Global Goals) helped to provide a focus on what needs to This huge global growth represents a move towards a critical be achieved to solve key global issues, and for many impact mass of ESG investing, with the integration of such factors investors have become a unifying context which informs impact increasingly seen as a part of fiduciary duty. This is reflected in objectives and key performance indicators. Yet whilst also the new UK Stewardship Code 2020 launched by the Financial helping to provide a focus for efforts, the targets set out by the Reporting Council which requires all signatories, including asset SDGs revealed a $2.5 to $3 trillion financing gap.33 If such targets owners and asset managers, to consider ESG factors across all are to be achieved, impact investing will have a central role to asset classes, including real estate. play in scaling up the mobilisation of private capital towards investment opportunities that aid achievement of the Global Goals.
“Stewardship is the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society.” The UK Stewardship Code 2020, Financial Reporting Council (FRC)
28. Global Sustainable Investment Alliance (GSIA) 2018 Investment Review http://www.gsi-alliance.org/wp-content/uploads/2019/06/GSIR_Review2018F.pdf 29. Forbes, The Remarkable Rise of ESG, July 2018. 30. Ivo Knoepfel, Who Cares Wins: Investing for Long-Term Value, October 2005. 31. Principles for Responsible Investment, 2019. 32. GIIN, 2020 Annual Impact Investor Survey, June 2020. 33. UNCTAD, World Investment Report 2014. Investing in the SDGs: An Action Plan, 2014.
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The Spectrum of Capital diagram (see Chart 8) is used to depict the Impact investments in social housing can be made across the broad range of financial and impact objectives that exist within the spectrum of capital and have a range of financial returns. Those investment market. Impact investments range from ‘finance-first’, that deliver most impact will have investment strategies designed delivering competitive financial returns, to ‘impact-first’, which to “Contribute to Solutions” e.g. the provision of homelessness tolerate higher risk projects or below-market financial returns. accommodation or new affordable housing for those in social need.
Chart 8: The Spectrum of Capital Choices and strategies for investors on the ‘spectrum of capital’.
APPROACH TRADITIONAL RESPONSIBLE SUSTAINABLE IMPACT INVESTING PHILANTHROPY
Accept lower Accept FINANCIAL risk-adjusted Below-market Accept full partial capital GOALS Accept competitive risk-adjusted financial returns financial returns loss of capital preservation returns
Act to avoid or reduce harm Mitigate or reduce negative outcomes for people and the planet
IMPACT Benefit stakeholders GOALS Generate positive outcomes for people or the planet
Contribute to solutions Generate positive change for otherwise underserved people or the planet
INTENTIONS
“I want to help “I want to behave tackle climate responsibly” change” “I want businesses “I am aware of “I have regulatory to have positive “I want to help potential negative requirements to effects on the world, tackle the impact, but do not meet” education gap” try and mitigate it” and help sustain long-term financial performance”
Source: Bridges Fund Management and Impact Management Project
The social housing sector has a growing need for additional investment. This Sustainability Reporting Standard will help the sector access the increasing global demand for sustainable and ESG integrated investments.
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ESG AND IMPACT INVESTMENT DIFFERENTIATING BETWEEN PRESENT AN OPPORTUNITY FOR ESG AND IMPACT REPORTING THE SOCIAL HOUSING SECTOR The approach presented in this paper is The substantial rise of both ESG and impact focused on building a sector-standard way of investing provides an opportunity for housing reporting on ESG factors. However, it also lays associations to reach a far broader universe the groundwork for impact reporting. of investors. Social housing represents a Both ESG and impact reporting reference an organisation’s particularly attractive proposition for both ESG impact on social and environmental issues. However, ESG and impact investors since it is an area that reporting typically focuses on disclosures that are within an attracts significant amounts of market capital organisation’s control and therefore easily captured from whilst clearly delivering something socially ’inside’ the reporting organisation (internal focus). Whereas beneficial impact reporting strives to directly measure changes to planet or people resulting from an organisation’s activities. This necessarily has an ‘external’ focus with outcomes often more In the face of diminished capital grant funding for the social accurately captured from ’outside’ the reporting organisation housing sector, there is an immediate opportunity for housing (external focus). associations to tap into this growing interest to attract new sources of capital. Public money evidently has a core role to Corporate ESG reporting has historically been focused on play in underpinning the sector, but for housing associations to avoiding harm, mitigating risks and managing reputations. help tackle the country’s shortage of truly affordable housing, Impact reporting has historically been focused on how new capital providers must be incentivised to enter the sector. organisations can make a positive contribution to the societal and environmental challenges the world faces. The social housing sector has been described as appearing to be ‘a natural home’ for investors seeking to make an impactful Yet, ESG reporting is evolving to include positive contributions, investment alongside a financial return, with measurable whilst impact reports are evolving to include negative impacts outputs and proven return expectations. As described by the and the associated risks. Thus, the lines between both forms editor of Social Housing, “There is no shortage of outputs of reporting are becoming increasingly blurred, and we have in the social housing sector when it comes to social value designed this Sustainability Reporting Standard for social – irrespective of debate around how they are reported. We housing with this progression in mind. have a regulated, not-for-profit, asset-backed sector with a core social purpose to deliver homes and services to In 2019, the UK government supported the establishment of the communities, including to some of the most vulnerable people Impact Investing Institute. The Institute brought together the in our society”.34 Yet being able to communicate their ESG work of the Implementation Taskforce for Growing a Culture of credentials effectively is crucial if housing associations are Social Impact Investing in the UK, led by Dame Elizabeth Corley to succeed in doing so. ESG data is an increasingly important and the National Advisory Board on Social Impact Investing means for allowing investors to identify organisations that led by Sir Harvey McGrath. The mission of the new Institute is are well-positioned for the future and that have the potential to accelerate the growth and improve the effectiveness of the to contribute to positive impact. The Sustainability Reporting impact investing market so that more capital contributes to Standard is focused on enabling housing associations to achieving the SDGs. communicate effectively to investors the ESG factors that are material to their business model. The Impact Investing Institute has been a member of the core working group. Big Society Capital and The Good Economy have partnered to further develop an impact reporting approach for social housing. This will apply many of the ESG criteria but relate these to positive impact objectives and targets, e.g. how much of an association’s housing is genuinely affordable looking at a person-centric test of affordability. Such an approach is particularly relevant to new funds which have explicit impact investing strategies. Work on this impact reporting approach is underway and will be further developed in consultation with a core group of partners over the coming months.
34. Social Housing, Could housing associations put the social in ESG?, September 2019. https://www.socialhousing.co.uk/comment/comment/could-housing-associations-put-the-social-in-esg-63039
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3. THE SUSTAINABILITY REPORTING STANDARD FOR SOCIAL HOUSING
PURPOSE Review of existing ESG Questionnaires. The Good Economy 1 reviewed nine different ESG questionnaires that are The purpose of this Standard is to create a being actively used by lenders and investors to the housing consistent, comparable and transparent associations sector to assess the ESG performance of housing approach to assessing the ESG performance associations. The recurring themes, questions and criteria were of housing associations. The drive to identified, compared and contrasted. create a standardised way to report on ESG Partnering with Ritterwald (a European real estate performance has been led by a partnership 2 consultancy) which has developed a Pan-European between housing associations, lenders and Label to certify the sustainability of housing companies. investors in the social housing sector. Ritterwald, a German consultancy, in collaboration with the European Federation for Living has developed a Certified Housing associations are increasingly being asked to complete Sustainable Housing Label (“the Label”) to assess the positive individual ESG questionnaires by banks and institutional impact of affordable housing providers for the investor market. investors which are being required to assess and monitor the This is gathering interest across Europe and Clarion was ESG performance of their investees. These questionnaires are certified in late 2019, utilising it in its recent Sustainability typically not specific to housing and therefore do not allow Bond Issue. For these reasons, we partnered with Ritterwald housing associations to demonstrate their ESG credentials in to develop the criteria. Specifically, using their Environmental an appropriate way. and Social criteria as a starting point in the development of this approach. A close working relationship has now been This project brought the social housing sector together to established with Ritterwald. develop a consistent, sector wide approach to ESG reporting which is acceptable to both the housing associations producing Align with global ESG and impact reporting standards the information and the lenders and investors using it. 3 and frameworks. These ESG criteria are specific to housing associations and relevant to the wider affordable housing The approach to the development of the standard is in line market. However, it was important to the working group that with the Impact Investing Institute’s recommendation that they follow best practice identified by the Impact Investing market participants should work together to “develop common Institute and align with emerging global corporate ESG and approaches, create system wide tools, and sector/theme impact reporting standards and metrics so that results can be specific metrics and KPIs, and share clear, accessible data easily mapped and achieve broad acceptance within the lender sets”. The social housing sector is the first sector to develop a and investor community. sector-standard approach to reporting. The criteria have been mapped to the following global PROCESS approaches and reporting standards: This Standard was developed in partnership with housing Sustainable Development Goals (SDGs) – all themes and associations (Peabody, Clarion, Optivo, and Sovereign), investors criteria have been aligned to specific SDG goals and (Insight and M&G), professional advisors (Centrus, Savills and indicators. Trowers & Hamlins) and impact investment specialists (Big International Capital Market Association (ICMA) and the Society Capital and the Impact Investing Institute). This original Loan Market Association (LMA) – see box on next page. working group was later joined by Legal & General, The Guinness Partnership, Home Group, NatWest Group, Pension Insurance Sustainability Accounting Standards Board (SASB) – Corporation and The Housing Finance Corporation. The process criteria are mapped to SASB criteria. was led by The Good Economy, a specialist impact advisory firm. Global Reporting Initiative (GRI) – criteria are mapped to GRI criteria. Task-Force on Climate Related Financial Disclosures (TCFD) – relevant TCFD reporting requirements have been considered within the environmental criteria.
The full mapping can be found in the accompanying Sustainability Reporting Standard – Criteria spreadsheet.
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Sustainable Finance Instruments This Standard will help housing associations with the KPI-linked instruments issuance of sustainable finance instruments in the ICMA principles for KPI-linked instruments bank and bond market. There are two major types of are based on five core components: instruments in this regard: Selection of Key Performance Indicators Use of proceeds based: Commitment to invest Calibration of Sustainability Performance Targets proceeds raised in projects with social and/or Bond characteristics environmental benefits. Governed by the ICMA Green, Reporting Social and Sustainable Bond Principles and the LMA Verification. Green Loan Principles KPI-linked based: Pricing of instrument (partly) linked This Standard supports the selection of KPIs and reporting to the housing provider achieving a sustainability target. requirements. In terms of the first, using metrics from Governed by the ICMA Sustainability Linked Bond Principles this Standard allows housing associations to demonstrate and the LMA Sustainability Linked Loan Principles. that they are in line with best practice industry standards comparable across their peer group. With regards to These principles are voluntary guidelines that recommend reporting, a housing association can readily provide this to transparency and disclosure and promote integrity in the investors through the reporting that is undertaken as part development of sustainable finance instruments. of its adherence to this Sustainability Reporting Standard.
Aligning with the Sustainability Reporting Standard will Alignment with this Sustainability Reporting Standard will help housing associations with the preparations and likely also have a broader marketability benefit. Banks marketing of a sustainable finance instrument. and investors analyse a sustainable finance instrument in the context of an organisation’s overall ESG strategy Use of proceeds instruments and disclosure. The production of an ESG or sustainability With regards to use of proceeds instruments, the ICMA report aligned with this Sustainability Reporting Standard principles set out four core components: will be reviewed positively in this regard. Use of proceeds: establishing the specific use of the funds/sustainability projects Process for project evaluation and selection Workshops with subject matter experts Management of proceeds 4 The definition of the specific criteria were refined during a Reporting on the impact performance of the series of workshops with subject matter experts from within the sustainability projects. working group organisations, including Heads of Sustainability, Community Investment and Legal and Governance from the Use of proceeds and reporting are particularly relevant housing associations and credit analysts and ESG analysts to this ESG framework. With regards to use of proceeds, from investors. The process ensured the criteria remained both applying the ESG reporting criteria can help a housing useful for investors, and relevant and measurable for housing association determine 1) a pool of assets that are already providers. performing strongly and 2) investments that are needed to improve its score in areas where it is underperforming. Sector-wide consultation Both aspects can be financed through a sustainable use 5 Between May 2020 and July 2020, sector-wider feedback of proceeds instrument. Relevant ICMA and LMA use of was sought on the specific criteria. During this period the proceeds categories for each ESG metric are set out in an working group received 53 submissions of written feedback, accompanying appendix to this report: Autumn 2020 - SRS the group also ran a series of webinar on the criteria, attended Criteria. by almost 400 people. The feedback was analysed and used to revise the criteria. The full feedback statement was published alongside this report.
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PRINCIPLES association. We expect medium and large housing providers The criteria were developed based on three underlying to be early adopters, however smaller housing providers principles. should also be able to use the approach to report their ESG performance in a standardised way. Where possible, use criteria that are already being measured and recorded and could be published in 1 Focus on the questions that are important. We only Annual Reports. Housing associations already capture and included criteria if they added necessary information report on significant volumes of data. We wanted to use 3 and were seen as relevant, meaningful and capable of being metrics that are publicly reported where possible and aligned answered. There is a constant tension between asking for with internationally recognised global reporting standards. more information and making the process too complex. Where This offers practicality for those producing the data and gives investors would like to understand certain aspects in more assurance and confidence to those receiving and monitoring it. detail, they may ask follow-up questions and where these are consistently focused on particular areas then over time the The criteria should work for small and large housing criteria could be developed in order to reflect this. 2 providers. The criteria should be useful for any housing
HACT Social Value Measurement Approach Many housing associations use the Social Value Bank, and The criteria have been designed to enable all housing the HACT Value methodology to report on their Social Value. associations to use them, without requiring lots of additional This process monetises specific outputs and outcomes data collection and analysis. For many criteria we have not delivered by a housing association. It goes into a high level of specified the exact indicator to use. Instead the Standard specific detail, so it complements our broad ESG approach. requires housing associations to report against the metrics The Standard specifies organisation-wide criteria to report they already use. For some this will be indicators and values against, across a broad range of ESG themes. Monetisation they have developed using HACT’s Social Value Approach. data from HACT Value provide good inputs to some of our specific Social criteria.
HOW THE CRITERIA ARE STRUCTURED Society Within the three high level areas: “Environment, Social Local Community and Governance” we identify a set of themes aligned with the UN Sustainable Development Goals (SDGs). Residents Environmental themes relate to management of housing stock whereas social criteria relate to residents and the local community. Housing Units Chart 9: Structured approach behind the criteria
Housing Affordability Associations Operating
Wellbeing ESG Construction Screening
Environmental Impact
Social Impact
– 25 – NOVEMBER 2020
Chart 10: Summary of the Criteria Themes
THEME ESG AREA # THEME NAME DESCRIPTION
This theme seeks to assess the extent to which the housing providers provides Affordability long-term homes that are genuinely affordable to those on low incomes. T1 and Security The theme is made up of five criteria including the tenure mix of new and existing properties, the security of tenure and fuel poverty.
This theme seeks to assess how effective the housing provider is at meeting Building its legal responsibilities to protect residents and keep buildings safe. T2 Safety and Quality The theme is made up of three criteria, disclosing gas safety checks, fire risk assessments and meeting Decent Homes Standards
This theme seeks to assess how effective the housing provider is at Resident listening to and empowering residents. T3 SOCIAL Voice The theme is made up of three themes that cover board scrutiny, complaint handling and resident satisfaction.
This theme seeks to assess the effectiveness of the initiatives that the Resident housing provider runs to support individual residents. T4 Support The theme is made up of two criteria that cover: What support is provided? and How successful is it?
This theme seeks to highlight the wider set of activities that housing providers undertake to create well-designed homes and places that meet T5 Placemaking local needs and provide great places for people to live and enjoy. The theme is made up of one criterion, a space for the housing provider to give examples of their placemaking or placeshaping work.
This theme seeks to assess how the activities of the housing provider are impacting on climate change, and how they are mitigating the physical Climate risks of climate change. This theme considers current practice, as well as T6 Change the changes being made to improve performance in the future. The theme is made up of six criteria, including the distribution of EPC ratings, emissions data, climate risk mitigation plan and environmental strategy.
This theme seeks to assess how the housing provider is protecting the ENVIRONMENTAL local environment and ecology. T7 Ecology The theme is made up of two criteria around managing pollutants and increasing biodiversity.
This theme seeks to identify the extent to which the housing provider has a sustainable approach to materials in both the construction and Resource T8 management of properties. Management The theme is made up of three themes that cover sourcing materials, water management and waste management.
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THEME ESG AREA # THEME NAME DESCRIPTION
This theme seeks to assess the housing provider’s overall structure and Structure and approach to Governance. T9 Governance The theme is made up of six criteria covering the regulator, code of governance, risk management and ownership.
This theme seeks to assess the quality, suitability and performance of Board and the board and trustees. T10 Trustees The theme is made up of eleven criteria including demographics of the board and the experience and independence of the board. GOVERNANCE
This theme seeks to assess how staff are supported and how their Staff wellbeing is considered. T11 Wellbeing The theme is made up of five criteria including salary information, additional support for staff and average sick days.
This theme seeks to assess if the housing provider procures responsibly. Supply Chain T12 Management The theme is made up of two criteria assessing how social value and environmental impact are considered.
– 27 – NOVEMBER 2020
TYPE OF CRITERIA The 48 criteria are provided in Annex 1. These criteria are divided It is also expected that investors will start to use these criteria into “Core” and “Enhanced”. in their own ESG assessments of investees. Therefore, in time, instead of issuing a new bespoke survey, investors will be able The set of Enhanced criteria are not less important, however to view the most recent Sustainability Reporting Standard report. it is expected that some of the Enhanced criteria might be too challenging or time consuming for some housing providers to As of 10/11/2020 there were 39 housing providers and 31 complete initially. These will become aspirational criteria that lenders/investors signed up as “Early Adopters” of the standard, will be completed in later years, and give housing providers who have committed to reporting against the final version of more options to demonstrate their performance. However, all the Sustainability Reporting Standard for Social Housing on Core criteria are required to be reported against. an annual basis, or integrating the Sustainability Reporting Standard for Social Housing into organisational policies, HOW TO USE THE CRITERIA processes and/or products.
It is expected that housing providers will report on their ESG In addition, there were 16 organisations involved in the sector performance on an annual basis, using the Sustainability who have committed to promote adoption and implementation Reporting Standard. The form of the report is not mandated, of the Sustainability Reporting Standard for Social Housing. however it is expected that this will not be part of the annual accounts of the housing provider. Instead it is expected that the housing provider will produce a standalone document, published on their website.
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ONGOING GOVERNANCE OF THE SUSTAINABILITY REPORTING STANDARD The Sustainability Reporting Standard is a voluntary reporting standard, designed to be used by both the social housing and financial sectors. Therefore it is important that the standard is owned and managed by practitioners from these sectors. To that end the Social and Affordable Housing Sustainability Reporting Standards Board (“the Board”) is being setup.
The Board will be made up of practitioners from the social The development of this voluntary disclosure framework has housing and financial sectors, as well as key sector bodies. been met with widespread support and positive engagement All appointments to the Board will be made through a public from across the social housing sector and from lenders and recruitment process. investors. The Working Group would like to thank all those involved in the development of the Standard. We have now The Board’s objectives will be to: passed further development to the Board. We look forward to Develop, issue and promote the Sustainability Reporting the further development and wide adoption of the Standard Standards for the social and affordable housing sector, as an exemplar of how to develop industry-led ESG reporting investor community and wider stakeholders. standards that can play a critical role in measuring, managing Issue guidance and promote good practice to support and reporting social and environmental outcomes. implementation of the sustainability reporting standards and seek feedback from reporting practitioners and users. Oversee a post-implementation review of the reporting standards. Regularly review the standard, taking account of new regulatory standards and performance measures as well as developments in global corporate reporting standards. Issue new versions of the standards periodically.
– 29 – NOVEMBER 2020 RATIONALE Providing affordable housing is a core purpose of regulated Housing Providers. purpose of regulated housing is a core They affordable Providing or buy in the to rent afford housing to households who cannot to help provide exist difficult are affordability to demonstrate measures Standardised open market. metrics are housing costs. Two market to define and will vary depending on local Housing to Local or compared rents market to private compared levels - rent proposed comparisons to the rents, recognise we with very In areas market low Allowance. has the most that affordability recognise Group The Working relevant. more LHA are are rents to income – Affordable compared meaning when the costs of housing are net income. than 35% of a household’s defined as costing no more typically to which a Housing Provider the extent type demonstrates tenure by This breakdown of social need those with a higher level accommodation which will target provides and supported housing = higher social need, social rent housing (i.e. affordable for social need). low-cost sector = lower whereas rental home ownership and private for to the Regulator to disclose this information required Housing Providers already are (SDR). This criterion Data Return Social Housing (RSH) as part of the annual Statistical insight into both an whilst offering burden does not add to the reporting therefore type. tenure of its stock by and a breakdown scale organisation’s homes completed in the last of a Housing Provider’s By understanding the breakdown intent and the nature an understanding develop we of the organisation’s financial year, those stock will target to which their future plans,of their growth particularly the extent of social need. with a higher level of homes for of fuel costs on the affordability This criterion highlights the effects of additional costs for consideration the Housing Provider’s residents, demonstrating of homes. efficiency on maximising the energy residents, as their focus as well sector social housing and the private between differentiator is a key Security of tenure and lives to people’s a huge difference suggests this security makes and evidence ability to find work, and services support networks local and formal informal access long term to offer in the housing sector is now lives. Good practice and build family possible. where needs residents tenancies to general NOTES Rent compared to PRS: The % compared Rent of the rent between difference number of beds,units split by rental and the median private the same number for sector rent authority of beds, using local data - found median rent people on: www.ons.gov.uk/ populationandcommunity/ housing/datasets/private summary rentalmarket statisticsinengland to LHA: compared Rent The % and the rent between difference Housing Allowance Local relevant Both % and number of homes to get an should be provided and understanding of scale type composition of tenure Both % and number of homes to get an should be provided and understanding of scale type composition of tenure MEASUREMENT UNIT % of PRS rent % of PRS rent % of LHA rent % properties, number of properties % properties, number of properties Qualitative response % of homes
CRITERIA For properties that are subject that are For properties regime, regulation to the rent against one or more report Metric: Affordability to Median compared 1) Rent sector (PRS) rent rental private Authority the Local across to Local compared 2) Rent (LHA) Housing Allowance of existing and number, Share, homes (homes completed the last financial year) before needs to: General allocated Intermediate rent, (social rent), Supported rent, Affordable older people,Housing, Housing for Care Low-cost home ownership, Sector Rented homes, Private homes of new and number, Share, completed (homes that were in the last financial year), needs to: General allocated Intermediate rent, (social rent), Supported rent, Affordable older people, Housing, Housing for Care Low-cost home ownership, Sector Rented homes, Private is the Housing Provider How trying of the effect to reduce on its residents? fuel poverty agreement tenancy fixed 3 year (or longer) TYPE OF CRITERIA # # T1 C1 Core T1 C2 Core T1 C3 Core T1 C4 Core T1 C5 Enhanced a homes have What % of rental
THEME AFFORDABILITY AND SECURITY AND AFFORDABILITY ANNEX 1: ESG CRITERIA
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RATIONALE This criterion is included to ensure that the Housing Providers’ portfolio of homes are are homes of portfolio that the Housing Providers’ This criterion is included to ensure risk, of fire their level for assessed regularly in the interests of resident safety. This is a particularly topical issue given the events of the events given issue This is a particularly topical safety. of resident onus on Housing Providers with an increased to in 2017, Tower Grenfell safety. to resident relating in dealing with issues role proactive a more take definition on the technical (DHS) is a government-agreed The Decent Homes Standard This is a standard as ‘decent’. a home to be classed statutory for minimum requirement stock. insight into the condition of a Housing Provider’s national criterion that provides insight into the influence criterion providing is a key of the board scrutiny Resident Residents decision making process. within the Housing Provider’s to residents afforded services and therefore the ultimate beneficiaries of Housing Provider’s are and sufficient means to scrutinise the decisions of board should have they issues. tenancy-related on key feedback communicate of the standard perception of resident indication a direct provides satisfaction Resident in performance of service The organisation’s is providing. that the Housing Provider so that an against stated targets should be measured satisfaction terms of residents Housing Providers time. over be tracked can in this area of their success assessment generally report that is specific to satisfaction in terms of residents their performance their is no industry-wide there metric) and so standardised (i.e. organisation which best suits the organisation. in a way this criterion should be reported with which Housing Providers complaints deal with resident The manner and timeliness The Housing provide. they of service of the standard is an important indicator that put things right, learn from Ombudsman advises Housing Providers to “be fair, been on complaints that have that reporting outcomes.” felt group The working criteria. reporting to the Ombudsman could be a standard escalated This criterion is included to ensure that the Housing Providers’ portfolio of homes are of homes are portfolio that the Housing Providers’ This criterion is included to ensure fittings and appliances, safety. of resident in the interests fitted with adequate and safe NOTES Housing Providers should also state their standard Risk Fire e.g. inspection cycle, completed on are Assessments an annual basis Possible approaches to approaches Possible include: scrutiny receiving members on the Resident Panels, Scrutiny Resident board, boards/forumsResident could Suggested response a resident include: Is there what happens to the survey, Are targets? there Are results? their to achieve on track they targets? MEASUREMENT UNIT % of homes Qualitative response Qualitative response Qualitative response % of buildings % of homes with a gas
have an in-date, an in-date, have
CRITERIA What % of homes meet the Decent Homes Standard? in are What arrangements to residents enable the to place hold management to account of services? provision for does the Housing Provider How Satisfaction Resident measure has Resident and how the changed over Satisfaction years?last three In the last 12 months, how been complaints have many the Ombudsman. upheld by these complaints have How (or others) in change resulted within the Housing of practice Provider? What % of homes appliance accredited gas safety check? gas safety accredited What % of buildings have an What % of buildings have Risk in-date and compliant Fire Assessment? TYPE OF CRITERIA # # T2 C8 Core T2 C6 Core T2 C7 Core T3 C9 Core T3 C10 Core T3 C11 Enhanced
THEME
AND QUALITY AND
RESIDENT VOICE RESIDENT BUILDING SAFETY SAFETY BUILDING
– 31 – NOVEMBER 2020 RATIONALE The distribution of the EPC ratings of a Housing Provider’s newly constructed homes newly of a Housing Provider’s The distribution of the EPC ratings an environmental plans from growth an insight into the Housing Provider’s provides is to which a Housing Provider the extent This criterion demonstrates perspective. efficient than older energy stock of housing is more committed to ensuring its future units. Disclosing the distribution of a Housing Providers’ EPC rating across its existing its existing across EPC rating Disclosing the distribution of a Housing Providers’ stock. of their current efficiency energy insight into the overall provides portfolio estate markets. the housing and real that is used across measure This is a standard Measuring the success of an organisation’s community investment is a key mechanism is a key community investment of an organisation’s Measuring the success and is transparent in this area of its progress is aware in ensuring that the organisation in terms of its performance. tangible demonstrations in placemaking or placeshaping activities provide Investment housing, but to creating commitment to not just providing of a Housing Provider’s and wellbeing. health, happiness people’s designed to promote places that are statutory the organisation’s to go beyond a willingness Such activities demonstrate approach. a resident-centred and evidence responsibilities NOTES Reference services that help Reference skills and Increase residents: their Increase gain employment, income and better manage their (ie this includes work money to benefits access to increase their debt), Improve and reduce their health, Improve physical mental health include: For each service, How Description of the service, directly have residents many KPIs the service, benefited from success. used to measure through of how, examples Provide a ‘whole approach’ organisation housing development, your management and community worked teams have investment and external with residents partners to bring about positive changes to a particular place, realm, spanning the physical community and local the local services. measures Detail your of success. MEASUREMENT UNIT % of Homes A,rated % of B, Homes rated % of Homes % of C, rated D, Homes rated % of Homes E or worse rated % of Homes A,rated % of B, Homes rated % of Homes % of C, rated D, Homes rated % of Homes E or worse rated Qualitative Qualitative response Qualitative response CRITERIA Distribution of EPC ratings of Distribution of EPC ratings homes (those completed new in the last financial year) Distribution of EPC ratings Distribution of EPC ratings homes (those of existing the last completed before financial year) What support services does to offer the Housing Provider its residents. successful How these servicesare in improving outcomes? or case examples Provide the Housing studies of where has been engaged in Provider placemaking or placeshaping activities Core TYPE OF CRITERIA Core # # T4 C12 T5 C13 Enhanced T6 C15 T6 C14 Core
THEME
RESIDENT SUPPORT RESIDENT PLACEMAKING CHANGE CLIMATE
– 32 – THE SUSTAINABILITY REPORTING STANDARD FOR SOCIAL HOUSING RATIONALE Having a strategy in place to increase the amount of green space or biodiversity the amount of green in place to increase on a strategy Having commitment to minimising both a Housing Provider’s or near homes demonstrates quality of space for in improving as its investment impact as well environmental is also an of a biodiversity strategy and measuring the success residents. Tracking in achieving invested remains important mechanism in ensuring that the organisation it has set out. the targets Having a strategy in place to manage and reduce pollutants provides a demonstration a demonstration pollutants provides in place to manage and reduce a strategy Having impact that is committed to minimising the environmental that the Housing Provider of a pollutant and measuring the success on the planet. Tracking its activities have is also an important mechanism in ensuring that the organisation strategy reduction it has set out. the targets in achieving invested remains materials in sourced the use of responsibly in place to increase a strategy Having is committed to that the Housing Provider a demonstration provides building works on the planet. Tracking impact that its activities have minimising the environmental is also an important strategy sourcing of a responsible and measuring the success the targets in achieving invested remains mechanism in ensuring that the organisation it has set out. Providing information to residents on sustainability matters to residents ventilation, such as correct information Providing is committed that a Housing Provider demonstration provides heating and recycling manage their homes residents How the sustainability of its portfolio. to improving and impact that a home creates influence on the environmental ultimately has a large to do so in a sustainable manner is an important how to residents so communicating impact of their portfolio. manage the overall Housing Providers can means whereby Assessing the Housing Provider’s consideration of flooding and overheating provides an provides of flooding and overheating consideration the Housing Provider’s Assessing risks of increasing of the housing stock in face of the climate resilience indication for asked were Both of these measures of flooding and rising summer temperatures. included as Enhanced during the consultation phase and are a number of investors by measures.reporting This criteria directly aligns with the Streamlined Energy and Carbon Reporting (SECR) and Carbon Reporting Energy aligns with the Streamlined This criteria directly specific details of their activities to to give the Housing Provider and asks approach, strategy. than just their business rather efficiency, energy improve Scope 1 emissions are direct emissions from owned or controlled sources. or controlled Scope 2 owned from emissions direct are Scope 1 emissions Scope 3 energy. of purchased the generation from emissions indirect are emissions This chain emissions. value capturing emissions, other indirect account for emissions many by for which is asked requirement reporting and easily comparable is a standard impact of an organisation’s an insight into the environmental to provide investors Scope 1 and only be able to report may that some organisations recognise activities. We data on Scope 3 emissions. be difficult to capture as it can 2 emissions NOTES Pollutants include, but are not but are Pollutants include, pipes limited to: Mould, water containing lead, diesel spills, disposal of paints Include information about both Include information and the severity the likelihood, buildings, your for of these risks mitigating and include any taking are actions that you Include information aboutInclude information builds as new as well retrofitting, If you are not tracking Scope 1,2, not tracking are If you but plan to in or 3 emissions, aiming you when are the future, on these emissions? to report
MEASUREMENT UNIT Qualitative Qualitative response 2. No, 1. Yes. but planning a to develop no 3. No, strategy. plans to develop plans to develop a strategy 2. No, 1. Yes. but planning a to develop no 3. No, strategy. plans to develop a strategy Qualitative Qualitative response Qualitative Qualitative response Qualitative Qualitative response kg C02 kg equivalent
CRITERIA a strategy to actively manage to actively a strategy all pollutants? and reduce does the Housing how If so, and measure target Provider performance? increasing Green Space and Green increasing Biodiversitypromoting on or near homes Does the Housing Provider have Does the Housing Provider to use or increase a strategy sourced the use of responsibly all building works? materials for does the Housing how If so, and measure target Provider performance? residents information about information residents heating, ventilation, correct Please describe etc. recycling this is done how mitigating the following climate mitigating the following flood risk, Increased risks: risk of homes Increased overheating has the Housing Provider has the Housing Provider in the last 12 months? undertaken green house gas emissions green Enhanced have Does the Housing Provider Enhanced is the Housing Provider How Enhanced Enhanced give Does the Housing Provider Enhanced is the Housing Provider How Enhanced actions efficiency What energy Enhanced Scope 1, 2 and 3 TYPE OF CRITERIA # # T7 C21 T7 C20 T8 C22 T6 C19 T6 C18 T6 C17 T6 C16
THEME
MANAGEMENT
CLIMATE CHANGE CLIMATE ECOLOGY RESOURCE RESOURCE
– 33 – NOVEMBER 2020
non-profit Housing non-profit
The majority of
RATIONALE This criterion is included to raise any issues that have adversely affected the Housing adversely affected that have issues any This criterion is included to raise issues It serves an important purpose in ensuing that any in the last year. Provider must be disclosed to investors. governance to the organisation’s relating Good governance is based on good systems and structures. The way a Housing Provider is based on good systems and structures. The way Good governance handle and they into how a clear view provides uses its Risk Management Framework risk.mitigate the impact of organisational This criterion provides insight into the ownership and control of for-profit Housing insight into the ownership of for-profit This criterion provides and control companies. of for-profit investors many by Providers. question asked It is a standard Registered Providers are required to follow an appropriate Code of Governance, this is also Code of Governance, an appropriate to follow Providers required are Registered a simple and provides commitment to good governance, a sign of Housing Provider’s the Provider. by taken snapshot into the approach Providers follow the National Housing Federation’s Code of Governance issued in 2020. issued Code of Governance the National Housing Federation’s Providers follow This is a standard criterion which is asked by many investors which provides information which provides investors many by criterion which is asked This is a standard the RSH. from and Financial Viability assessment Governance on the Housing Provider’s G/VThe resultant to meet the Regulator’s capacity signifies the Housing Provider’s grading effectively. to mitigate its financial exposures and its capacity requirements governance This is a standard criterion which validates that the Housing Provider is regulated by by is regulated that the Housing Provider criterion which validates This is a standard regulatorythe appropriate body. Having a strategy in place for waste management incorporating building materials management incorporating waste in place for a strategy Having is committed to minimising the that the Housing Provider a demonstration provides and measuring on the planet. Tracking impact that its activities have environmental is also an important mechanism in management strategy of a waste the success it has set out. the targets in achieving invested remains ensuring that the organisation a demonstration management provides good water in place for a strategy Having impact is committed to minimising the environmental that the Housing Provider of a and measuring the success on the planet. Tracking that its activities have is also an important mechanism in ensuring that the management strategy water it has set out. the targets in achieving invested remains organisation NOTES Risk Management Framework, Risk Register The strategy should cover both should cover The strategy homes and corporate resident operations
MEASUREMENT UNIT Yes/No Qualitative Answers will include: Possible Name, %, % Name, Name of code G1/V1 etc. Yes/No 1. Yes. 2. No, 2. No, 1. Yes. but planning a to develop no 3. No, strategy. plans to develop plans to develop a strategy 2. No, 1. Yes. but planning a to develop no 3. No, strategy. plans to develop a strategy
CRITERIA subject to any adverse regulatorysubject to any findings in the last 12 months breaches, data protection (e.g. laundering, HSE money bribery, or notices) – that breaches or in enforcement resulted action? other equivalent Explain how the Housing Explain how manages board Provider’s risks organisational Is the Housing Provider Is the Housing Provider Not-For-Profit? If not, who is the largest what is their % of shareholder, economic ownership and what control? rights do they % of voting Which Code of Governance Which Code of Governance does the Housing Provider if any? follow, What is the most recent What is the most recent viability and governance regulatory grading? Is the Housing Provider Is the Housing Provider of with a regulator registered social housing? have a strategy for waste waste for a strategy have management incorporating building materials? does the Housing how If so, and measure target Provider performance? have a strategy for good water good water for a strategy have management? does the Housing how If so, and measure target Provider performance? Enhanced been Has the Housing Provider Core Core Core Core TYPE OF CRITERIA Core Enhanced Does the Housing Provider Enhanced Does the Housing Provider # C24 # T9 C30 T9 C29 T9 C28 T9 C27 T8 C23 T9 C26 T8 T9 C25
THEME
RESOURCE MANAGEMENT RESOURCE GOVERNANCE AND STRUCTURE
– 34 – THE SUSTAINABILITY REPORTING STANDARD FOR SOCIAL HOUSING RATIONALE Board diversity evidences that a Housing Provider is not discriminatory diversityBoard that a Housing Provider evidences in its selection The demographic body. highest governance up the organisation’s of members to make investors, with extra many by question asked is a standard composition of the Board The inclusion of as part of this answer. required on the metrics that are guidance here to the response. better context will help to give demographics resident of stability and of the level an indication provides and management turnover Board and governing for responsible amongst those who are continuity that has existed running the Housing Provider. to serve agreed members board the purpose of ensuring generally are limits for Term potentially discourage which can do not end up with static membership, that boards requires. This losing touch with what the organisation thinking and the Board innovative in policy has an appropriate insight into whether the Housing Provider criterion provides members. of board systematic rotation place to encourage in bringing an in an organisation an important role directors play Non-executive is and management decisions. to governance Since a non-executive impartial view to add value agreed is generally not a member of the management team, their view the potential conflict of and serve by an important purpose since it is unaffected and the existence This criterion evidences operations. to manage day-to-day having within the Housing detached and impartial viewpoint of this more representation by for question which is asked This is a standard body. highest governance Provider’s investors. many financial and relevant Committee should contain individual(s) with recent The Audit should and experience of such financial knowledge since the presence experience is fully compliant with the appropriate audit process that the organisation’s ensure and regulations. laws be a significant Committee would sitting on the Renumeration executive A current of poor governance. and suggest wider issues conflict of interest that an indicates plan to the board of a succession presentation The recent changes in the makeup future for steps to prepare appropriate has taken organisation clear planning and senior management team. This evidences of the organisation’s governance. in the Housing Provider’s preparedness years, is a concern that over many there the same auditor has been used for Where This is a a lack of scrutiny. and therefore will be a conflict of interest time there investors. many by question which is asked standard NOTES Qualitative response to include: response Qualitative women? are What % of the board BAME? are What % of the board a have What % of the board age of the disability? Average of the board tenure Average board. MEASUREMENT UNIT Qualitative Qualitative response % Length Yes/No, of tenure % Number and description of experience Yes/No Yes/No Number of whole years CRITERIA What are the demographics of the demographics What are does this And how the board? to the demographics compare of the Housing Provider’s residents, that and the area in? operate they commentaryAdd if useful. AND What % of the board turned management team have years? in the last two over commentaryAdd if useful. for a maximum tenure Is there what member? If so, a board is it? are What % of the board directors? non-executive membersNumber of board Committee with on the Audit financial and relevant recent experience current any there Are on the executives Committee? Renumeration plan been Has a succession in the to the board provided last 12 months? years has the many For how current Housing Provider’s audit partner been external auditing the for responsible accounts? TYPE OF CRITERIA # #
T10 C31 Core T10 C32 Core T10 C33 Core T10 C34 Core T10 C35 Core T10 C36 Core T10 C37 Core T10 C38 Core
THEME BOARD AND TRUSTEES AND BOARD
– 35 – NOVEMBER 2020 RATIONALE Disclosing the gender pay gap provides a simple picture of gender equality in the a simple picture gap provides Disclosing the gender pay metric. reporting corporate a standard and is now workplace, dispersion between pay a Housing Provider’s demonstrates ratio pay The CEO-worker which measure This is a standard median earner. the CEO and organisation’s is a pay The matter of executive equity. pay an insight into organisation’s provides in the UK, 1st January from issue come into force topical having regulations with new than 250 UK listed companies with more 2020 making it a statutory for requirement Housing believes group The working ratio. pay to disclose their CEO-worker employees to corporates. compared on this measure well Providers will perform Housing Providers by to support the actions taken This criterion helps to demonstrate an providing and mental health wellbeing, their staff in terms of physical as a good employer. of the Housing Provider indicator an insight gives per employee lost to illness number of days on the average Reporting commitment to staff health and wellbeing. into the Housing Provider’s Where a Housing Provider pays the Real Living Wage, this gives a good insight into their this gives Living Wage, the Real pays a Housing Provider Where is based on independent calculations Living Wage The Real to staff wellbeing. approach cost of living in the UK.of the real that the Housing demonstrates Accreditation that earn a wage and contractors is committed to ensuring its employees Provider minimum. meets the cost of living, not just government It is best practice to review board-effectiveness every years. three This is a board-effectiveness to review It is best practice Code – July 2018. Governance in The UK Corporate recommendation of the CEO is to act as primaryThe role whilst the role manager of an organisation, management. which overseesof the Chair is to head up board, the organisation’s aids accountability and corporate these roles that separating agreed It is generally This authority. board since management authority is distinguished from responsibility both Chairpersonallows and CEO to pursue duties without concern that one respective question which is This is a standard influence the other. negatively may set of interests investors. many by asked increases. a conflict of interest Therefore for the likelihood As Housing Providers grow, arise. of handling them when they way an appropriate have it is vital that they NOTES Reporting should be in-line with Reporting standards: government www.gov.uk/guidance/gender- pay-gap-reporting-overview the CEO and median pay This criteria will of workers. use the Department of BEIS Methodology: https://assets. publishing.service.gov.uk/ government/uploads/system/ uploads/attachment_data/ file/755002/The_Companies__ Miscellaneous_Reporting__ Regulations_2018_QA_-_ Publication_Version_2__1_.pdf Calculated and set by Calculated and set by www.livingwage.org.uk MEASUREMENT UNIT Number between Calculated as the ratio Qualitative response Number of days Yes/No is Living Wage The Real Date Yes/No Qualitative CRITERIA What is the gender pay gap?What is the gender pay % gap ratio? and support the physical mental health of their staff? per employee taken Does the Housing Provider pay pay Does the Housing Provider Living Wage? the Real When was the last When was board- independently-run, review? effectiveness of the chair the roles Are two and CEO held by the board people? different does the Housing Provider How at handle conflicts of interest the board? TYPE OF CRITERIA # # T11 C44 Enhanced pay What is the CEO-worker T11 C45 EnhancedT11 does the Housing Provider How C46 Enhanced number of sickdays Average T11 C43 Core T11 C42 Core
T10 C39 Core T10 C40 Core T10 C41 Core
THEME
BOARD AND TRUSTEES AND BOARD WELLBEING STAFF
– 36 – THE SUSTAINABILITY REPORTING STANDARD FOR SOCIAL HOUSING RATIONALE During the consultation, organisations recognised that the housing sector has recognised During the consultation, organisations local contracting through its supply chain e.g. through social value potential to deliver residents. This job opportunities for and social enterprises creating businesses social Housing Providers take they to describe how an opportunity for criterion provides including any policies and processes, in their procurement into consideration value Act. alignment with the Social Value impact. This criterion supply chain also has an environmental A Housing Provider’s Housing Providers seek to reduce to describe whether they an opportunity for provides contractors requiring by impact of their supply chain e.g. environmental the negative certain sustainability standards.to reach NOTES MEASUREMENT UNIT Qualitative Qualitative Response Qualitative Response CRITERIA How is Social Value creation creation is Social Value How when procuring considered goods and services? impact is environmental How when procuring considered goods and services? TYPE OF CRITERIA # #
T12 C47 Enhanced T12 C48 Enhanced
THEME SUPPLY CHAIN SUPPLY
– 37 – NOVEMBER 2020
ANNEX 2: BIBLIOGRAPHY RESEARCH REPORTS 2019 Global Accounts of private registered providers, Regulator of Social Housing, December 2019 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/852013/2019_Global_ accounts_of_private_registered_providers.pdf 8.4 million people in need of a suitable home – briefing and resources, National Housing Federation www.housing.org.uk/resources/8.4-million-people-in-need-of-a-suitable-home---briefing-and-resources/ Accounts Commission and Auditor General, Housing in Scotland, July 2013 www.audit-scotland.gov.uk/docs/local/2013/nr_130711_housing_overview.pdf Affordable Housing Supply: April 2018 to March 2019 England, MHCLG, 20 November 2019 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/847661/Affordable_Housing_ Supply_2018-19.pdf Annual Survey for Hours and Earnings (ASHE) 2019, Office of National Statistics www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/annualsurveyofhoursandearnings/ previousReleases Baker, Emma, Beer, Andrew, Lester, Laurence, Pevalin, David, Whitehead, Christine and Bentley, Rebecca, Is housing a health insult?, LSE Research Online, June 2017 http://eprints.lse.ac.uk/79372/1/Whitehead_Housing%20health%20insult_2017.pdf Bramley, Professor Glen, Housing supply requirements across Great Britain: for low-income households and homeless people, Crisis and National Housing Federation, November 2018 https://www.crisis.org.uk/ending-homelessness/homelessness-knowledge-hub/housing-models-and-access/housing-supply- requirements-across-great-britain-2018/ Building the Social Homes We Need – Solving the Land And Capacity Challenges, New Economics Foundation, November 2019 https://neweconomics.org/2019/11/building-the-social-homes-we-need Chartered Institute of Housing, Rethinking Social Housing – Final report, June 2018 www.cih.org/resources/PDF/Policy%20free%20download%20pdfs/Final%20Rethinking%20social%20housing%20report.pdf Comparing affordable housing in the UK: April 2008 to March 2018, Office of National Statistics www.ons.gov.uk/releases/affordablehousingintheuk Doubling of the housing benefit bill is sign of something deeply wrong, Institute for Fiscal Studies, 4 March 2019 www.ifs.org.uk/publications/13940 Election 2019: how Britain’s North-South divide is changing, Resolution Foundation, 6 December 2019 www.resolutionfoundation.org/comment/election-2019-how-britains-north-south-divide-is-changing/ How many people need a social rented home?, National Housing Federation, September 2019 www.housing.org.uk/news-and-blogs/1-in-7-people-in-england-directly-hit-by-the-housing-crisis/ How many people need a social rented home?, House of Commons Library, Briefing Paper Number 07671, Tackling the under-supply of housing in England, March 2020 Ivo Knoepfel, Who Cares Wins: Investing for Long-Term Value, October 2005 www.ifc.org/wps/wcm/connect/9d9bb80d-625d-49d5-baad-8e46a0445b12/WhoCaresWins_2005ConferenceReport.pdf?MOD=AJP ERES&CACHEID=ROOTWORKSPACE-9d9bb80d-625d-49d5-baad-8e46a0445b12-jkD172p Land For The Many – Changing the Way Our Fundamental Asset is Used, Owned and Governed, Labour Manifesto, June 2019 https://landforthemany.uk/ Local authority housing statistics: Year ending March 2018, MHCLG, 24 January 2019 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/773079/Local_Authority_ Housing_Statistics_England_year_ending_March_2018.pdf National Community Land Trust Network www.communitylandtrusts.org.uk/ People in Housing Need, National Housing Federation (NHF), September 2020 https://www.housing.org.uk/resources/people-in-housing-need/ Housing affordability in England and Wales: 2019, Office for National Statistics, March 2020 https://www.ons.gov.uk/peoplepopulationandcommunity/housing/bulletins/housingaffordabilityinenglandandwales/2019 Poggio, Teresio and Whitehead, Christine, Social housing in Europe: legacies, new trends and the crisis, LSE Research Online, November 2017 http://eprints.lse.ac.uk/85743/ Private registered provider social housing stock in England – sector characteristics and stock movement, 2018-2019, Regulator of Social Housing, October 2019 www.gov.uk/government/statistics/statistical-data-return-2018-to-2019 Residential Investment in International Markets, IPF Research Programme 2011 – 2015, November 2014
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Savills, Competition or collaboration?, 25 June 2019 www.savills.co.uk/research_articles/229130/283872-0 Savills, How do we reach 300,000 Homes? And who will build them?, 15 Oct 2018 www.savills.co.uk/research_articles/229130/267515-0/how-do-we-reach-300-000-homes--and-who-will-build-them- Savills, Private Money and Affordable Housing, December 2019 https://pdf.euro.savills.co.uk/uk/residential---other/private-money-and-affordable-housing---december-2019.pdf Savills, The plot thickens, 25 June 2019 https://www.savills.co.uk/research_articles/229130/246728-0 Savills, The Savills Housing Sector Survey 2018 https://www.savills.co.uk/research_articles/229130/246728-0 Schifferes, Jonathan and Thorold, Jake, 5 ways housing associations underpin inclusive growth, Royal Society of Arts, 21 February 2017 www.thersa.org/discover/publications-and-articles/reports/5-ways-housing-associations-underpin-inclusive-growth Shelter UK, A Vision for Social Housing, January 2019 https://england.shelter.org.uk/support_us/campaigns/a_vision_for_social_housing Shelter, What is ‘affordable housing’?, 10 August 2015 https://blog.shelter.org.uk/2015/08/what-is-affordable-housing/ Social housing in England: a survey, Institute for Fiscal Studies, November 2015 www.ifs.org.uk/uploads/publications/bns/BN178.pdf#page=9 The Northern Ireland Federation of Housing Associations https://nifha.org/who-we-are/about-us/ UK Collaborative Centre for Housing Evidence, Dr Bob Smith, Social housing in Wales, 25 Oct 2018 http://housingevidence.ac.uk/wp-content/uploads/2018/10/R2018_SHPWG_04_Bob_Smith.pdf UK Housing Review 2019, Section 2 Commentary, John Perry, Chapter 4 Housing expenditure https://www.ukhousingreview.org.uk/ukhr19/housingexpenditure.html UK Poverty 2019/20, The leading independent report, Joseph Rowntree Foundation https://www.jrf.org.uk/report/uk-poverty-2019-20 UK private rented sector: 2018, Office of National Statistics https://www.ons.gov.uk/economy/inflationandpriceindices/articles/ukprivaterentedsector/2018 Understanding Local Housing Markets, Advice and Guidance for Local Authorities, A Report for the Local Government Association, Residential Analysts, June 2019 www.local.gov.uk/understanding-local-housing-markets United Nations Human Rights Office of the High Commissioner, Annual Report, Financialization of housing and the right to adequate housing, 18 January 2017 Whitehead, Christine, Social housing models: past and future, LSE Research Online, November 2017 http://eprints.lse.ac.uk/85740/
MAGAZINE AND NEWSPAPER ARTICLES Financial Times, Is for-profit investment in social housing a good or a bad thing?, June 2019 www.ft.com/content/d667c6e4-605c-11e9-9300-0becfc937c37 Finansol, 2019 Study on ‘90/10’ Funds, 2019 www.finansol.org/_dwl/Study-On-2090-10-20Funds-20Finansol.pdf Forbes, The Remarkable Rise of ESG, July 2018 www.forbes.com/sites/georgkell/2018/07/11/the-remarkable-rise-of-esg/#3443dfe51695 INREV, AMPERE Gestion’s second intermediate housing fund (FLI2) raised EUR 1.25 billion, 10 Oct 2019 www.inrev.org/news/industry-news/ampere-gestions-second-intermediate-housing-fund-fli2-raised-eu125-billion Inside Housing, Are Social Housing Green Paper proposals on ice? We look at what has happened since last year, 16 August 2019 www.insidehousing.co.uk/insight/are-social-housing-green-paper-proposals-on-ice-we-look-at-what-has-happened-since-last- year-62826 Inside Housing, As HAs we must be prepared to make decisions which do not make commercial sense, 3 March 2019, www.insidehousing.co.uk/comment/comment/as-housing-associations-we-must-be-prepared-to-make-decisions- which-do-not-make-commercial-sense-63010 Inside Housing, Decarbonisation cannot be achieved without massive improvements to housing stock, 9 August 2019 www.insidehousing.co.uk/comment/comment/decarbonisation-cannot-be-achieved-without-massive-improvements-to- housing-stock-62669
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Inside Housing, Insurance giant registers as a provider of social housing, 10 December 2018 https://www.insidehousing.co.uk/news/news/insurance-giant-registers-as-a-provider-of-social-housing-59432 Inside Housing, New report shows just how difficult hitting 300,000-home target will be, 11 Feb 2019 www.insidehousing.co.uk/comment/comment/new-report-shows-just-how-difficult-hitting-300000-home-target-will-be-60144 Inside Housing, Scottish government announces £3.5m fund for decarbonising social housing, 14 June 2019 www.insidehousing.co.uk/news/news/scottish-government-announces-35m-fund-for-decarbonising-social-housing-61902 Inside Housing, Starting to bite: how Universal Credit is making people homeless, 14 Dec 2018 www.insidehousing.co.uk/insight/starting-to-bite--how-universal-credit-is-making-people-homeless-59445 Inside Housing, Theresa May announces plan to scrap council borrowing cap, 3 October 2018 www.insidehousing.co.uk/home/home/theresa-may-announces-plan-to-scrap-council-borrowing-cap-58468 Inside Housing, Why it’s time to consider a Decent Homes Standard version two, November 2018 www.insidehousing.co.uk/comment/comment/why-its-time-to-consider-a-decent-homes-standard-version-two-59259 Inside Housing, North vs South: the great funding divide, 23 August 2019 www.insidehousing.co.uk/insight/insight/north-vs-south-the-great-funding-divide-62836 Social Housing, Making an impact: what the rise of ESG investment means for social housing, 5 September 2019 www.socialhousing.co.uk/insight/insight/making-an-impact-what-the-rise-of-esg-investment-means-for-social- housing-63040 Social Housing, Social circles – how ESG could widen the investor pool for UK housing, 20 Nov 2019 www.socialhousing.co.uk/login?Refdoc=https%3A%2F%2Fwww%2Esocialhousing%2Eco%2Euk%2Fcomment%2Fcomm ent%2Fsocial-circles--how-esg-could-widen-the-investor-pool-for-uk-housing-64221 The Guardian, Home ownership among people aged 35-33 has plunged, ONS, 10 Feb 2020 www.theguardian.com/money/2020/feb/10/home-ownership-ons-rent The Guardian, Homelessness: rough estimates fail to tell full story, 25 Sep 2019 www.theguardian.com/society/2019/sep/25/ homelessness-rough-estimates-fail-to-tell-full-story
– 40 – THE SUSTAINABILITY REPORTING STANDARD FOR SOCIAL HOUSING
EARLY ADOPTERS
The following organisations have signed up to become early adopters of the Sustainability Reporting Standard for Social Housing. The housing providers have committed to reporting against the Standard on an annual basis, while the lenders and investors have committed to using the Standard in their investment and credit policies, processes and/or product design.
Housing providers Lenders and investors Abri Affirmative Investment Management Adra Affordable Accommodation Investment Management (AAIM) Alliance Homes Aviva Investors Broadacres Housing Association BAE Systems Pension Funds Investment Management Catalyst Housing Barclays CHP BlackRock Investment Management (UK) Clarion Housing Group Civitas Investment Management ClwydAlyn Clydesdale and Yorkshire Bank Curo Group GB Social Housing Dolphin Living Henley Investment Management Gloucester City Homes HSBC UK Bank Grand Union Housing Group Insight Investment Management (Global) Great Places Housing Group LaSalle Investment Management The Guinness Partnership LGIM Real Assets Halton Housing Lloyds Bank Commercial Banking Home Group M&G Investments Hyde Group MORhomes Jigsaw Homes Group National Australia Bank Karbon Homes NatWest Group Lincolnshire Rural Housing Association Pension Insurance Corporation LiveWest Homes PGIM Real Estate Livin Housing Principality Building Society Magenta Living Rathbone Greenbank Investments Metropolitan Thames Valley Rothesay Life Midland Heart Royal London Asset Management Network Homes Schroders Newlon Housing Trust Scottish Widows Octavia Housing The Housing Finance Corporation Optivo The International Business of Federated Hermes PA Housing Triple Point Investment Management LLP Peabody Platform Housing Group Pobl Group Rooftop Housing Group Settle Group Sovereign Housing Association Stonewater Homes Thirteen Group Vivid Housing
– 41 – NOVEMBER 2020
ENDORSERS
The following organisations have signed up to become endorsers of the Sustainability Reporting Standard. As endorsers, these organisations commit to promoting the adoption and implementation of the Standard.
Adecoe National Housing Federation Bevan Brittan Ritterwald Big Society Capital Savills Centrus Suss Housing HACT The Law Debenture Trust Corporation Impact Investing Institute The Sovini Group Low Carbon Journey TPAS Money A+E Trowers & Hamlins
SUPPORTERS
Both the Regulator of Social Housing and Homes England have expressed their support for the Standard.
“As the Government’s housing delivery agency, Homes England works to increase investment into the affordable housing sector through our own funding and by connecting private capital and institutional investors with affordable housing providers.
The affordable housing sector, with its clear impact on social outcomes is uniquely placed to meet investors’ environmental, social and governance (ESG) objectives. For this reason, we commend The Good Economy’s work to develop an evolving approach to more consistent, comparable ESG reporting.
Bringing together registered providers, lenders and investors with a common approach is a big step towards providing investors with the accountability they need to unlock wider institutional investment into affordable housing.” Gordon More, Chief Investment Officer, Homes England
“We welcome sector stakeholders taking the initiative to improve social landlords’ access to finance in a rapidly changing market.” Regulator of Social Housing
– 42 – THE SUSTAINABILITY REPORTING STANDARD FOR SOCIAL HOUSING
– 43 – CONTACT
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